Query asked by Rajvi Shah
Mr. A (died on 1 June 2021). His tax return is pending to be filed for FY 20-21. For FY 20-21, as Mr. A was alive throughout the year, all his income would be taxable in his hands. Accordingly, will have to get a legal heir registered on the income tax portal and proceed to file his return for FY 20-21.
For FY 21-22, he has income earned for 2 months until 31 May 2021. Thereafter, income received would be reported in the hands of legal heir. Thus, 2 returns would be required to be filed, (a) one for 2 months under the deceased PAN and (b) other for 10 months under the legal heir’s name.
There is some more income expected to be received in FY 22-23. As income is received after 1 June 2021, the tax return for FY 22-23 would be filed under legal heir’s name.
(a) Can a tax return under deceased PAN be filed only once i.e. for only one tax year?
(b) If the answer to above is Yes, is it possible to club income of April and May 21 with FY 20-21 income i.e. income for FY 20-21 would consist of 14 months and proceed to file the return.
(c) Can a tax return under legal heir’s PAN be filed more than one year i.e. for FY 21-22 and FY 22-23?
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a) Sections 159 160 and 161 of the Income -tax Act 1961 deals with provisions relating to assessment of Legal Representative. An Assessee died on 1st June, 2021. Then Return of Income for FY 2020 – 21 would be filed by the Legal Representative / Heirs as per the provision of Income -Tax Act, 1961 and under the PAN of the deceased assessee. The name of the legal representative must be specified . Sahasragshu Kanta v Collector of Malda ( 1963 ) 47 ITR 754 ( Cal ) ( HC)
b) Section 2 (9) define the term “Assessment year” period of 12 months commencing on the 1st April of every year .Accordingly the clubbing is not possible for FY .2021 – 21 & 2021 – 22. For the FY 2021 – 22, the Legal Representative / heir of the Deceased Assessee would file a separate return of income for 2 months for April & May 2021 for FY 21- 22 under the deceased PAN as Legal Representative .
c) In case the income is expected to be received after 1st June, 2021 in FY 21 – 22 from the estate of the deceased the “legal representative / heirs” as per section 161 of the Income Tax Act, 1961 has to apply for new PAN as “Estate of the deceased person” and file return of income with new PAN till the disposal / dissolution of the income / property / assets of the deceased.
d) In case a person who dies without leaving a will (i.e. he dies intestate), in such cases the assets would be distributed according to the law based on his/her religion. The Assets / Income of the deceased assessee shall be distributed according to the Hindu Succession Act and the property is transferred to the legal heirs of the deceased.
e) Under the Indian Succession Act 1925, probate is mandatory under the following conditions :
• A will within the geographical limits of the state of West Bengal and municipal limits of the metro cities of Chennai and Mumbai.
• The above rule of mandatory probate is applicable if the will is made by a Hindu, Jain, Sikh, or Buddhist.
• It is worthy to note that the above rule applies to a will that does not deal with any immovable property.
f) Although the probate of the will is not mandatory in all other cases, it is advisable to obtain probate in cases where there is a probability of the validity of the will being challenged on any grounds in the future. Once the assets are distributed , it is desirable to inform the Income tax Authority to cancel the PAN of the legal Representative.
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