2024 (9) TMI 1112 - AT - Income Tax

Assessment order passed against deceased person - addition of the cash found deposited in his bank account during demonetization - HELD THAT - In the present case after the intimation of the death of the assessee to the AO, no notice whatsoever was served on the legal representative. Prior to the death of the assessee there was no reply filed to the AO. Subsequent to his death, the AO was required to seek the necessary information from his legal representative for framing assessment. No such act was done by the AO. Besides the assessment is also framed on a deceased person. The Hon ble jurisdictional High Court in the case of Chandreshbhai Jayantibhai Patel 2019 (1) TMI 353 - GUJARAT HIGH COURT has categorically held that no order can be passed on a deceased assessee. Assessment order is quashed as invalid, and the appeal of the assessee is allowed for the above reason.

Summary

Issues:
1. Validity of assessment order made on a deceased person.
2. Addition of cash deposited during demonetization period.

Detailed Analysis:

Issue 1: Validity of assessment order made on a deceased person
The appeal was filed against an order passed by the Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act, 1961, pertaining to Assessment Year 2017-18. The assessee raised grounds challenging the legality of the assessment order made under section 143(3) in the name of a deceased person. The contention was that the order was invalid as it was issued to a non-existent assessee who had passed away during the assessment proceedings. The assessee's counsel argued that this fact was intimated to the Assessing Officer, and the assessment order was the first time this issue was raised before the ITAT. The order confirmed an addition of cash deposited during demonetization, but the main plea was the invalidity of the assessment order due to being made on a deceased individual.

Issue 2: Addition of cash deposited during demonetization period
In the assessment, an addition of Rs. 15,00,000 was made to the income of the assessee on account of unexplained cash deposits during the demonetization period. The Commissioner of Income Tax (Appeals) confirmed this addition but restricted it to Rs. 13 lakhs, considering a credit of Rs. 2 lakhs for cash deposited by the senior citizen assessee in compliance with the Government of India's directions during demonetization. The appeal challenged this addition, arguing that it was bad in law. The ITAT noted that the assessment order was made on a deceased person, which was a clear violation of the law. Section 159 of the Income Tax Act provides for the assessment of income of a deceased person and the liability of the legal representative to pay taxes. The ITAT referred to relevant provisions of section 159(1) and (2) and held that no notice was served on the legal representative after the intimation of the assessee's death. The assessment order was deemed invalid as it was made on a deceased individual, in line with a precedent set by the jurisdictional High Court.

In conclusion, the ITAT quashed the assessment order as invalid due to being made on a deceased person and allowed the appeal of the assessee on this ground. The appeal filed by the assessee was allowed, and the order was pronounced in open court at Ahmedabad on 30/07/2024.