Supreme Court and High Courts Clarify: Income Tax Returns Must Be Filed for Deceased Person’s Estate Until Asset Distribution

COURTKUTCHEHRY SPECIAL REPORT

Supreme Court and High Courts Clarify: Income Tax Returns Must Be Filed for Deceased Person’s Estate Until Asset Distribution

Legal heirs and executors must comply with Section 159 of the Income Tax Act to avoid scrutiny

Courts rule tax proceedings against deceased invalid unless heirs are substituted and informed

By Our Legal Reporter

New Delhi: December 16, 2025:

Filing income tax returns (ITRs) after the death of a taxpayer often creates confusion for families. Recent government clarifications and court rulings have made it clear that legal heirs or executors must file ITRs for the estate of the deceased until all assets are distributed. The issue has gained attention after the government identified several cases where notices were wrongly issued in the names of deceased persons, leading to litigation.

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According to experts, if a valid will exists, the executor must continue filing ITRs until the estate is fully settled. Courts, including the Calcutta High Court and Madras High Court, have also ruled on the validity of tax proceedings against deceased persons.

Relevant Laws

• Section 159 of the Income Tax Act, 1961:
  • States that legal representatives are liable to file returns and pay taxes on behalf of the deceased.
  • The liability continues until the estate is fully distributed.
• Section 168 of the Act:
  • Provides that executors of a will are treated as assessees for the estate.
  • Executors must file returns until distribution is complete.
• Section 147/148 (Reassessment):
  • Notices cannot be issued in the name of a deceased person.
  • Proceedings must be initiated against legal heirs once death is notified.

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Key Court Judgments

1. Calcutta High Court (Kripa Shankar Mahawar v. Principal CIT, 2025):
   • Held that income tax proceedings cannot be initiated against a deceased person.
   • Notices issued in the name of a dead assessee are null and void.
2. Madras High Court (2024 case):
   • Sustained reassessment against a deceased assessee because legal heirs failed to inform the department of death.
   • Clarified that heirs must promptly notify authorities.
3. ITAT Ahmedabad (Heta Rawal v. DCIT, 2025):
   • Ruled that appellate proceedings conducted in the name of a deceased assessee are legally unsustainable.
   • Directed substitution of legal heirs.

These rulings highlight the importance of timely communication with the tax department.

What Taxpayers Should Do to Avoid Scrutiny

• Inform the Income Tax Department: Immediately notify authorities of the death with a death certificate.
• Update PAN and Aadhaar records: Ensure the deceased’s PAN is linked to the estate and legal heirs.
• File ITRs for the estate: Continue filing returns until all assets are distributed.
• Maintain documentation: Keep copies of the will, succession certificate, and asset distribution records.
• Respond to notices: If notices are wrongly issued in the name of the deceased, reply promptly citing court rulings.
• Seek professional advice: Consult tax experts to ensure compliance with Sections 159 and 168.

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Wider Implications

• For Families: Prevents harassment and ensures smooth settlement of estates.
• For Tax Authorities: Encourages better record-keeping and avoids issuing notices to deceased persons.
• For Courts: Reduces litigation by clarifying liability of heirs and executors.

Conclusion

The law is clear: income tax returns must be filed for a deceased person’s estate until all assets are distributed. Courts have reinforced that proceedings against deceased persons are invalid unless heirs are substituted. To avoid scrutiny, families must promptly inform the tax department, file estate returns, and maintain proper documentation.

This ensures compliance, protects heirs from unnecessary litigation, and upholds fairness in India’s tax system.

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