Post-death income and unsupported enhancement cannot be taxed in a legal heir's hands without proof.

Income arising after a deceased person's death cannot be assessed as the deceased's income through a legal heir; assessment must proceed against the proper taxable person, such as the estate, and on the stated facts the reassessment in the legal heir's name was quashed. An enhancement relating to the HSBC account in the name of Investment Lexcor S.A. was also deleted because the assessee's ownership denial was supported by affidavit and corroborative material, while the department produced no contrary evidence. The article thus reflects relief to the assessee on both substantive issues.

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Issues: (i) Whether the reassessment for the year of death could validly be framed in the name of the legal heir instead of the estate of the deceased for income arising after the date of death; (ii) Whether the enhancement made by the first appellate authority in respect of the HSBC account standing in the name of Investment Lexcor S.A. was sustainable.

Issue (i): Whether the reassessment for the year of death could validly be framed in the name of the legal heir instead of the estate of the deceased for income arising after the date of death.

Analysis: The income brought to tax for the year under appeal arose after the death of the assessee. The provisions governing a deceased person's tax liability distinguish between liability of a legal representative for sums the deceased would have been liable to pay and assessment of the income of the estate in the hands of the executor. Income that accrues after death cannot be assessed as the deceased person's income through a legal heir. On the facts, the assessment was made on the legal heir though the return was filed by the estate, and the assessment therefore proceeded against the wrong taxable person.

Conclusion: The assessment framed on the legal heir was not in accordance with law and was quashed in favour of the assessee.

Issue (ii): Whether the enhancement made by the first appellate authority in respect of the HSBC account standing in the name of Investment Lexcor S.A. was sustainable.

Analysis: The record showed that the assessee had consistently claimed that the account belonged to the brother, supported by an affidavit and corroborative material, and the department had not brought any contrary evidence to displace that claim. The first appellate authority relied mainly on beneficiary references and the residual estate clause, which did not establish that the account represented income assessable in the assessee's hands. In the absence of material contradicting the ownership claim, the enhancement could not be sustained.

Conclusion: The enhancement of income relating to Investment Lexcor S.A. was deleted in favour of the assessee.

Final Conclusion: The appeal succeeded and the orders of the tax authorities were set aside on the substantive issues decided, resulting in relief to the assessee.

Ratio Decidendi: Income arising after the death of a person cannot be assessed in the hands of the deceased through a legal heir; it must be assessed, if at all, in the hands of the estate or other rightful taxable person, and an enhancement cannot stand without cogent evidence establishing assessability in the assessee's hands.

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