PRADEEP JAIN LEGAL HEIR OF JAY NARAYAN,FIROZABAD vs. INCOME TAX OFFICER, WARD 2(2)(2), FIROZABAD

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ITA 338/AGR/2024Status: DisposedITAT Agra06 February 2025AY 2017-184 pages
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What did the Tribunal hold?

The Tribunal held that the proceedings initiated against the appellant, identified as a "legal heir" rather than a "legal representative" under the law, were not sustainable. The Tribunal noted that the Revenue failed to provide a clear response on whether the appellant represented the estate of the deceased. Citing the Supreme Court's decision in Commissioner vs. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB), the Tribunal adopted a stricter construction of the law. It reasoned that for a "legal representative" to be held liable under Section 159(4) of the Act, it must be established that the estate of the deceased has devolved upon them or they are managing it. Since no such finding was present in the assessment or appellate orders, the appeals were allowed on this preliminary legal ground, rendering all other merits-based arguments infructuous. The operative direction was to allow the appeals.

What were the facts?

The assessee, Sh. Pradeep Jain, identified as the legal heir of the deceased Late Sh. Jay Narayan, filed five appeals (ITA Nos. 334 to 338/Agr/2024) for assessment years 2013-14 to 2017-18. These appeals challenged orders passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, dated 24.07.2024. The challenged orders involved proceedings under Section 147 of the Income-tax Act, 1961, concerning alleged unexplained cash deposits/credits in the hands of the deceased assessee. The deceased passed away on 24.12.2014. The core issue revolved around whether the appellant, as a "legal heir," could be held liable for the deceased's tax obligations.

What were the issues?

1. Whether the proceedings initiated under Section 147 of the Income-tax Act, 1961, against the appellant, identified merely as a "legal heir" of the deceased assessee, are sustainable in law, considering the statutory definition of a "legal representative" under Section 2(11) of the Code of Civil Procedure, 1908, and its implications under Section 159(4) of the Income-tax Act, 1961. The Assessee contended that the lower authorities erred in treating the appellant as liable by classifying him as a "legal heir" rather than a "legal representative" as defined by law. The assessee argued that for liability to attach, the appellant must legally represent the estate of the deceased, which was not established. The assessee relied on the principle of stricter construction as per Commissioner vs. Dilip Kumar And Co. & Ors. [2018] 9 SCC 1 (SC) (FB). The Revenue did not provide a clear-cut response regarding whether the appellant had succeeded to the estate of the deceased or was the legal representative. The Revenue did not present any arguments countering the assessee's preliminary legal objection.

Which sections of the Income-tax Act were involved?

Section 147,Section 68,Section 2(29),Section 2(11),Section 159(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH, “DB” AGRA

Before: SHRI SATBEER SINGH GODARAAND

Hearing: 06.02.2025Pronounced: 06.02.2025
1.

The appellant herein Sh. Pradeep Jain (alleged legal heir of Late Sh. Jay Narayan) has filed his instant five appeals 335, 336, 337 and 338/Agr/2024 for assessment years 2013-14 to 2017-18, against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1066966935(1), ITBA/NFAC/S/ 250/2024-25/1066967387(1), ITBA/NFAC/S/250 /2024- 25/1066968177(1), ITBA/NFAC/S/250 /2024-25/1066968426(1) and ITBA/NFAC/S/250 /2024-25/1066968973(1), all dated 24.07.2024, involving proceedings under section 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively.

2.

Heard both the parties at length. Case files perused.

3.

It emerges at the outset during the course of hearing that both the lower authorities have treated the appellant herein Sh. Pradeep Jain as the “legal heir” of the deceased assessee, Late Sh. Jay Narayan, who left for his heavenly abode on 24.12.2014, for the purpose of assessing section 68 unexplained cash deposits/credits in his hands, involving varying sums, respectively in his hands.

4.

This being the clinching backdrop involved herein, we sought to know from the Revenue side as to whether this appellant Sh. Pradip Jain has succeeded to the estate of the deceased assessee or not so as to be held as the “legal representative” as defined under section 2(29) of the Act adopting statutory definition given in section 2(11) of the Code of Civil Procedure, 1908 reading as under: “The legal representative means a person who in law represents the estate of deceased person……………..” 2 | P a g e

5.

No clear-cut response has come from the department side to this effect. This is indeed coupled with the fact that both the learned lower authorities have held the assessee as “legal heir” than the deceased assessee’s “legal representative” in the foregoing terms. We deem it appropriate to quote section 159(4) of the Act as well that liability in such an instance of a legal representative is to the extent of deceased assessee’s estate’s value only. There is again no finding either in the assessment order or in the lower appellate discussion that such an estate has ever devolved upon the appellant or he is managing the same or an intermeddler thereof, as the case made be.

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