1988 (12) TMI 130 - AT - Income Tax

Legal heirs bound by eldest son's representation in tax assessment. Liability limited to estate assets.

The Tribunal held that the representation by the eldest son in re-assessment proceedings was substantial and binding on all legal heirs, even if not all ... Assessing Officer, Bona Fide, Legal Representative Issues:1. Representation of legal heirs in re-assessment proceedings.2. Liability of legal representatives in tax assessments.3. Dispute over ownership of property in recovery proceedings.Representation of Legal Heirs:The appeals involved the representation of legal heirs in re-assessment proceedings for the deceased individual Venkatadri. The eldest son, V. Vijaykumar, received notice under section 148, and the re-assessment was conducted against the estate represented by him. The legal representatives V. Ratna and V. Sridhar contested the re-assessments, arguing that they had not been served with notice before the assessments were made. The Commissioner of Income-tax (Appeals) rejected their contention, stating that the re-assessment made against the estate of Venkatadri could be enforced against all legal representatives. The Tribunal examined various legal precedents and concluded that the representation by the eldest son was substantial and binding on all legal heirs, even if not all had received notices.Liability of Legal Representatives:The liability of legal representatives in tax assessments was a key issue in the appeals. Section 159(6) of the Income Tax Act specifies that the liability is limited to the extent to which the estate can meet the obligations. The Commissioner of Income-tax (Appeals) acknowledged this limitation and emphasized that legal heirs could prove they had not received any property from the deceased's estate to regulate the tax liability. The Tribunal clarified that the ownership of specific assets or properties within the estate was irrelevant for the assessments, as long as all assets belonging to the deceased were available to meet the tax liabilities. The Tribunal expunged certain observations by the Commissioner of Income-tax (Appeals) regarding property ownership disputes, emphasizing that legal representatives' liability is tied to the assets of the deceased's estate.Dispute Over Ownership of Property:A dispute arose over the ownership of a property in Bangalore City during recovery proceedings. The High Court of Karnataka had ordered the attachment of the property, but legal representatives, including the wife Anusuya, claimed it was her personal property, not part of Venkatadri's estate. The Tribunal noted that resolving ownership disputes over specific properties was not necessary for the tax assessments. The legal representatives' liability was limited to the assets of Venkatadri's estate for meeting tax obligations under section 159(6). The Tribunal dismissed the appeals, subject to the clarification that the liability of legal representatives was tied to the estate's assets, regardless of specific property ownership disputes.---