Section 159 of the Income-Tax Act lays down the liabilities of the legal representatives of a deceased person. In most cases, the individual's spouse or eldest son/daughter assumes the status of legal heir or representative. This is unless the will mentions another person to be the executor or administrator of the estate.
By section 159, the legal heir or representative is deemed the assessee. As such, s/he will have to pay taxes liable to be paid by the deceased, including advance tax and self-assessment tax. If s/he chooses not to file the return, the tax authorities could levy the same penalty as on the deceased. However, the money for paying the taxes does not go out of the legal heir's pocket. "The amount for paying the tax has to go out from the deceased's estate. Liability of the legal representative is limited to the extent the estate is capable of meeting the liability,"
In case of a deceased person, the the legal heir of the deceased person has to file income tax return for the financial year. the assessment of his income is to be done upto the time of his death.
The income earned in the year of death is classified in two categories:
Income earned from April 1 till the date of death
Income earned thereafter till the end of the financial year.
How to file IT Return please follow the following link-