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Facts
Smt. Savitri Devi received compensation and interest for compulsory land acquisition and passed away on 10.10.2008. Shri Vijay Kumar Garg, her GPA holder and a beneficiary in her will, was assessed by the AO for this income for AY 2008-09, treating him as a legal heir. He contended he received no assets from the deceased and his GPA expired upon her death.
Held
The Tribunal held that upon the death of the principal, the GPA holder's powers expire, and thus Vijay Kumar Garg could not be considered a legal heir. Despite the AO being aware of the actual legal heirs, the assessment was erroneously framed against Shri Vijay Kumar Garg. Consequently, the assessment was declared void ab initio.
Key Issues
Whether a General Power of Attorney holder can be assessed as a legal heir for the income of a deceased person, and the validity of an assessment framed on a GPA holder after the principal's death when he received no assets.
Sections Cited
143(3), 147, 159(1), 159(2), 159(4), 159(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: The appeal in for AY 2015-16, arise out of the 1. order of the Commissioner of Income Tax (Appeals)-37, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 37/10221/2018-19, A.Y. 2015-16 dated 22.09.2020 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.12.2017 by the Assessing Officer, DCIT, Circle-16 (2), New Delhi (hereinafter referred to as „ld. AO‟).
The revenue has raised the following grounds of appeal before us:-
“i). That the Ld. CIT(A) has erred in deleting addition of Rs.2,41,16,145/- on account of interest on land compensation and interest from bank and failed to appreciate that the assessee, Sh. Vijay Kumar was holding GPA on behalf of Smt. Savitri Devi on or before her death on 10.10.2008, which Page | 1 Vijay Kumar proves he was her legal heir and it was his legal obligation to file the return of income for the AY 2008-09 on or before the due date of filing of the return and to pay due taxes out of the funds available with Smt. Savitri Devi. ii. Ld. CIT(A) has erred and failed to appreciate that during the course of assessment proceeding proceedings, the assessee failed to furnish any documentary evidence in support of his claim that the has not received any asset/ estate from the deceased or no assets/ estate was left by Smt. Savitri Devi at the time of her death. iii. Ld. CIT(A) has erred in law and failed to appreciate that Smt. Savitri Devi had received amount of Rs. 1.03,75,705/- as interest on land compensation and Rs. 1,37,40,440/- interest from bank on FD of compensation totaling to Rs. 2,41,16,145/-. Being legal heir, the assessee Sh Vijay Kumar is liable to pay the taxes on behalf of deceased Smt. Savitri Devi. Mere filing of an affidavit stating that he has not received any assets/ estate from the deceased is not proper and sufficient to discharge his onus. iv) The Ld. CIT(A) has erred in law and failed to appreciate that assessee Sh. Vijay Garg itself confirmed in his statement dated 16.01.2014 that Smt. Savitri Devi had made a will and that too registered in the name of Sh. Vijay Kumar as beneficiary/ legal heir along with other four beneficiaries / legal heirs. v) The Id. CIT(A) has erred in law and failed to appreciate the fact that in the instant case, provisions of section 159(4) is not applicable. The said provision makes the legal representative personally liable in case the assets of the deceased are disposed of or parted with by the legal heir which is not the situation in the present case. Instead, in this case the provisions of section 159(1)/ 159(2) are applicable.”
We have heard the rival submissions and perused the materials available on record. The assessment was completed u/s 143(3) r.w.s. 147 of the Act dated 31.3.2014 by the ld AO determining the total income at Rs 2,41,16,145/-. Smt Savitri Devi got certain compensation along with interest on compulsory acquisition of land by Government of Haryana. She expired on 10.10.2008. Shri Vijay Kumar Garg was General Power of Attorney (GPA) holder of Smt Savitri Devi. Smt Savitri Devi made a will that after her death, following persons shall receive her estate:-
a) Shri Vijay Kumar Garg b) Shri Lalit Kumar
It is true that Shri Vijay Kumar Garg (GPA Holder) is one of the beneficiaries of the estate of Late Smt Savitri Devi. But Late Smt Savitri Devi had no assets or estate left at the time of her death and accordingly, Shri Vijay Kumar Garg or any of the legal heirs mentioned in the will had not received any amount from her estate. The ld AO however rejected this plea and proceeded to treat Shri Vijay Kumar Garg (GPA Holder) as legal heir and framed the assessment on him u/s 143(3) rws 147 of the Act on 31.3.2014 by taxing the interest on land compensation and interest from bank on FD of compensation in his individual hands.
Shri Vijay Kumar Garg is an Advocate and had also filed a letter before the ld AO that he had not received any assets or monies from the estate of Late Smt Savitri Devi eventhough his name is mentioned in the will as one of the beneficiaries along with legal heirs. First of all there were no assets left in the estate of Late Smt Savitri Devi at the time of her death. In any event, once the person dies, the powers vested with the GPA Holder also vanishes and would be of no relevance. Hence making an assessment by considering the GPA holder as the legal heir, when other legal heirs were duly brought on record before the ld AO is grossly illegal and on this count itself, the assessment deserves to be quashed. We find that the ld CIT(A) had adjudicated the issue in dispute by observing as under:-
That the case decided by AO has no legal basis.
A perusal of the facts and record of the assessee's file reveals that AO has not brought anything on record to prove that Sh. Vijay Garg the assessee is legal heir of the deceased. As per submissions made by the AR, Sh. Vijay Garg was only the General Power of Attorney holder. As per law Vijay Kumar the General power of attorney expires as soon as the person who has given power of attorney expires. In this case Smt. Savitri Devi has expired. The second point raised by the AO is that Smt. Savitri Devi has declared him as legal heir along with Sh. Lalit Kumar, Sh. Ramesh Kumar, Sh. Suresh Kumar & Sh. Anoop Kumar. As per section 159(6) The liability of a legal representative under this section shall, subject to the provisions of sub- section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability.
The assessee has repeatedly submitted that he has not received any money from the estate of deceased late Smt. Savitri Devi and according to section 159(6) he is not liable to pay any tax due to Smt. Savitri Devi. I have perused the records carefully. The AO has not brought anything on record to rebut the contentions of the assessee nor has brought anything on record to prove that assessee has received any Immovable/movable asset from deceased. In view of above position, I, therefore delete the addition of Rs. 2,41,16,145/-.
In the result, the appeal is allowed.” 6. We find that the assessee was a GPA Holder in Asst Year 2008-09, however, when the scrutiny assessment proceedings for Asst Year 2008-09 were in progress, Smt Savitri Devi had expired. With her death, the GPA Holder‟s powers also expire by operation of law. Hence the assessee cannot by any stretch of imagination be brought under the ambit of legal heirs. The assessee had duly given the list of legal heirs before the ld AO. Despite having those details, the ld AO chose to frame the assessment in the name of the assessee who was not the legal heir at all. Hence it could be safely concluded that the ld AO had taken a conscious decision to frame the assessment in the hands of the assessee. This assessment is hereby declared void abinitio. We have no hesitation to quash the assessment framed in the hands of Shri Vijay Kumar Garg (assessee herein) in respect of receipts of Late Smt Savitri Devi. Accordingly, the grounds raised by the revenue are dismissed.
Order pronounced in the open court on 26 /11/2024.