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2019 (11) TMI 263 - AT - Income TaxLiability in special cases u/s 159 - liability of Legal Heir where trust has been created as per the WILL of the deceased assessee - Addition on account of difference between sale consideration and market value of properties - HELD THAT - The liability in special cases regarding legal representatives is provided in Section 159 in chapter XV of the Income Tax Act. The provision u/s 159 of the Act explains that where a person dies, his legal representatives shall be liable to pay any sum which the deceased have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. As discussed above there is no evidence in the hands of the AO to treat Smt. Sumita Bhattacharya(Das) as the legal representative of the deceased assessee. The definition of legal representative is provided in sub- Section 11 of Section 2 of Code of Civil Procedure. Legal representative means a person who in law represents the estate of a deceased person in a representative character the person on whom the estate devolves on the death of the party. As discussed above, the deceased assessee late Rathindranath Bhattacharya left a WILL giving effect to the same after his death declaring that all his immovable and movable properties would devolve on the TRUST and nothing of his estate devolved on Smt. Sumita Bhattacharya (Das), alleged legal heir. It is noted from the WILL that he is a bachelor having intended to create a TRUST after his death in the name of his deceased father for the activities discussed therein. Therefore, it clearly shows that late Rathindranath Bhattacharya died executing a WILL declaring all his immovable and movable properties to be devolved in the said TRUST after his death. It is established that he died testate and when he died testate decided declaring the said TRUST would succeed to his estate and the question of legal heir does not arise. Therefore, Smt. Sumita (Bhattacharya) Das cannot be said to his legal heir. Thus, we find no infirmity in the order of CIT(A) and it is justified. Ground nos. 1 to 4 raised by the Revenue involving the issue are dismissed.
Issues Involved:
1. Validity of the notice issued under Section 143(2) of the Income Tax Act to a deceased person. 2. Validity of the notice issued under Section 142(1) of the Income Tax Act to an alleged legal heir without proper evidence. 3. Determination of the legal heir of the deceased assessee. 4. Applicability of Section 159 of the Income Tax Act concerning the liability of legal representatives. Detailed Analysis: Issue 1: Validity of the notice issued under Section 143(2) of the Income Tax Act to a deceased person. The notice under Section 143(2) was issued to the deceased assessee Rathindranath Bhattacharya on 28.08.2015, after his death on 27.03.2015. The CIT(A) held that the notice was "null and void ab-initio" as it was issued to a person who had already expired. The Tribunal agreed with this finding, noting that the death certificate confirmed the date of death and that issuing a notice to a deceased person is invalid. Issue 2: Validity of the notice issued under Section 142(1) of the Income Tax Act to an alleged legal heir without proper evidence. The AO issued a notice under Section 142(1) to Smt. Sumita Bhattacharya (Das), assuming her to be the legal heir of the deceased. The CIT(A) found this notice invalid as there was no evidence, such as a legal heir certificate or a will, establishing her as the legal heir. The Tribunal upheld this view, emphasizing the lack of documentary evidence to support the AO's assumption. Issue 3: Determination of the legal heir of the deceased assessee. The deceased had executed a will seven days before his death, creating a trust named "Ramesh Chandra Smriti Raksha Trust" and declaring that all his properties would devolve upon this trust. The will did not name Smt. Sumita Bhattacharya (Das) as his legal heir. The Tribunal noted that under the Hindu Succession Act, the rules of intestate succession do not apply as the deceased had died testate (with a will). Therefore, Smt. Sumita Bhattacharya (Das) could not be considered the legal heir. Issue 4: Applicability of Section 159 of the Income Tax Act concerning the liability of legal representatives. Section 159 of the Income Tax Act holds legal representatives liable for the tax obligations of the deceased. However, the Tribunal found that the AO had no evidence to treat Smt. Sumita Bhattacharya (Das) as the legal representative. The will explicitly stated that all properties would devolve upon the trust, and not on Smt. Sumita Bhattacharya (Das). Thus, she could not be held liable as a legal representative under Section 159. Conclusion: The Tribunal dismissed the Revenue's appeal, agreeing with the CIT(A) that the notices issued under Sections 143(2) and 142(1) were invalid due to the lack of evidence establishing Smt. Sumita Bhattacharya (Das) as the legal heir. The deceased had created a trust through his will, and as such, the properties were to devolve upon the trust, not on any individual. The assessment made in the hands of Smt. Sumita Bhattacharya (Das) was therefore void. The appeal of the Revenue was dismissed.
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