2024 (3) TMI 1006 - AT - Income Tax

Assessment proceedings against one of the legal heirs - deceased/assessee had admittedly more than one legal representatives - deceased father has six sons - Addition u/s 69A - cash deposits made in his bank accounts during the demonetization period - HELD THAT - As undisputed fact for the Asst. Year 2017-18, the assessee has not filed his Return of Income, since there is no taxable income in his hands and also for the reasons of wound-up of his business activities. However during demonetization period, the assessee made cash deposits in his three Bank Accounts. In the meanwhile, the assessee died on 28.01.2019. Thereafter the final show cause notice was issued by the Ld. A.O. on one of the legal heir namely Shri Vijay Laxmichand Demla filed a detailed letter that his deceased father has six sons and given their details. Further he refused to accept any responsibility, since he is not sole legal heir for the estates of his deceased father and also he was not in possession of any details/documents regarding his father s cash deposits which was rejecgted by AO. Assessing Officer when put to notice about the death of the assessee and the details of the six legal heirs of the deceased assessee, A.O. ought not have proceeded with only one of the legal heir namely Shri Vijay Laxmichand Demla in spite of his specific objection - Admittedly the legal heir Shri Vijay Laxmichand Demla is not only the legal heir on the estate of the deceased. Thus the Assessing Officer having not included all the legal heirs of the deceased assessee and framed the assessment only against one of the legal heir is against the provisions of law and the assessment is invalid in law. Thus the entire assessment is hereby quashed. Assessee appeal allowed.

Summary

Issues Involved:
The judgment involves issues related to assessment of unexplained income, legal representation of deceased assessee, jurisdictional defects in assessment order, and dismissal of appeal by Commissioner of Income Tax (Appeals).

Assessment of Unexplained Income:
The appeal was filed by a legal heir of the deceased assessee against the appellate order passed by Commissioner of Income Tax [Appeals], arising from the assessment order under section 144 of the Income Tax Act, 1961. The deceased assessee had made cash deposits during demonetization period, and the Assessing Officer proceeded with making an addition of Rs. 27,65,420/- under section 69 as unexplained income. The tax on this amount was charged at 60% under section 115BBE of the Act, and penalty proceedings were initiated for non-compliance of notice and non-filing of Return of Income.

Legal Representation of Deceased Assessee:
The legal heir of the deceased assessee raised a ground that the Assessing Officer failed to bring on record all the legal representatives of the deceased assessee. Despite providing details of six legal heirs, the Assessing Officer proceeded with the assessment treating one legal heir as the sole representative. The legal counsel cited a precedent where it was held that if a deceased person has more than one legal representative, notice for reassessment should be served on all of them to ensure proper representation of the estate.

Jurisdictional Defects in Assessment Order:
The legal heir contended that the Assessment Order was jurisdictionally defective as it was passed without bringing on record all the legal heirs despite being informed about them. The legal representative argued that he was not the sole legal heir and should not be solely responsible for the tax liabilities of the deceased assessee. The jurisdictional defect in the assessment order was highlighted as a ground for appeal.

Dismissal of Appeal by Commissioner of Income Tax (Appeals):
The legal heir appealed against the dismissal of the appeal by the Commissioner of Income Tax (Appeals). Grounds of appeal included errors in law and facts, lack of sufficient opportunity provided to the appellant, failure to record points for determination, decisions, and reasons as required by the Income Tax Act, and confirmation of the addition of unexplained income. An additional ground of appeal was raised regarding the jurisdictional defects in the assessment order due to non-inclusion of all legal heirs.