Question: My father passed away without a will a few years ago, leaving behind three children (two married sons and one married daughter). Our mother had passed away long ago. Till date we have not been able to divide the property amongst ourselves. What were the consequences for him as we have not filed any ITR for him after his death? We have also not been able to withdraw the balance in PPF account and bank fixed deposit nor have we been able to file an insurance claim with the insurance company. Can you please tell us how income tax on father’s property will affect us if we don’t take distribution for next 10 years? Is there any income tax penalty for delayed delivery? – Ramesh Choudhary
answer: If a person dies without leaving a valid will in respect of property owned by him, it is said to be testamentary to that extent. In the case of an intestate death, the personal law of the decedent applies as to who will inherit the decedent’s property and by how much. In case of intestate death of a Hindu, the succession to the property owned by the deceased is governed by the Hindu Succession Act, 1956. In a case where no valid will is left by the deceased, all property is immediately passed on to the heirs without the need to be made by anyone at the time of their death.
As per the schedule of Hindu Succession Act all three of you are entitled to equal share in all the properties owned by your father as your mother was not alive at the time of your father’s death. Since all of you became property owners immediately after the death of your father, the question of keeping the property pending distribution does not arise and you should have included the income related to various properties in your respective Income Tax Return (ITR). You have to include such income in your ITR whether the assets are actually divided among the beneficiaries or not.
As far as your father’s ITR is concerned, you were required to file ITR as the legal representative of your father in respect of income up to the date of your death for the period from 1st April of the year to the date of death. And after that no ITR is required to be filed in respect of income from property owned by your father as immediately after his death all the property became vested in the legal heirs. Since one cannot file ITR for more than one year, you cannot file your old ITR now. If the Income Tax Department comes to know about it, it can issue a notice to you and in that case, you may have to pay tax and interest on the income related to your share in the property of your deceased father, apart from penalty . Between 50% to 200% of such tax liability.
Balwant Jain is a tax and investment specialist and can be reached on Twitter at jainbalwant@gmail.com and @jainbalwant.
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