INCOME TAX OFFICER WARD 321 AHMEDABAD, AHMEDABAD V. PANCHANBHAI MULJIBHAI CHAVDA, A VINZUVADA MANDAL

ITA 1951/AHD/2024

AI Insights

The case involves an appeal by the Income Tax Officer (ITO) against the decision of the CIT(A) which quashed the assessment order for the assessment year 2017-18. The original assessment was based on unexplained cash deposits in the bank account of the deceased, Panchanbhai Muljibhai Chavda, during the demonetization period. The ITO argued that the legal heir continued to use the deceased's PAN and conduct business without informing the tax department. The CIT(A) found procedural errors in how the assessment was conducted, particularly the failure to properly notify the legal heir and the incorrect issuance of the assessment order in the name of a deceased person. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for proper legal procedure in tax assessments involving deceased persons.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312579 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Kanubhai Dhirubhai Patel vs. ITO, Rasid Lala vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: CHIRAG SHAH
• Keywords: Unexplained cash credit; Bonafide belief
• Section: 148; 142(1); 139

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before Ms. Suchitra Kamble , Judicial President And Shri Makarand V. Mahadeokar, Accountant Member The ITO, Ward-3(2)(1), Ahmedabad (Appellant) Vs Panchanbhai Muljibhai Chavda, A Vinzuvada Mandal, Ahmedabad (Respondent) Assessee by: Shri Chirag Shah, A.R. Revenue by: Shri B.P. Srivastava, Sr. D.R. Date of hearing : 07-04-2025 Date of pronouncement : 29-04-2025 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 03-09- 2024 passed by CIT(Appeal), NFAC Ahmedabad for assessment year 2017-18 2. The grounds of appeal are as under:- “The appellant has raised the following grounds of appeal: (a) In the facts and circumstances of the case, the CIT(A) has erred in quashing the assessment order and deleting the addition of Rs. 1,47,28,200/- made by AO on account of unexplained credit transaction reflected in bank account ignoring that there was cash deposit in the bank of the deceased assessee during the relevant year (which was much after the death of Sri Pachanbhai Muljibhai Chavda) and the AO was under the best ITA No. 1951/Ahd/2024 Assessment Year 2017-18 I.T.A No. 1951/Ahd/2024 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 2 bonafide belief that the assessee was alive, when he issued the notice. (b) The CIT(A) has erred in holding that the AO had framed the assessment in a deceased person's name, whereas the AO has clearly mentioned in the assessment order that he had got notices served on the legal heir of the deceased assessee who did not respond to any of the notices. In fact the A.O. became aware of the death of the assessee only due to \"Postal Remarks” not from the legal heir. (c) The ld CIT(A) erred in not appreciating that admittedly the legal heir of the deceased assessee was continuing the business of the assessee during the demonetization period, through his bank account and using PAN, after his death, without intimating the Department and/or without surrendering PAN as per law. (d) The Ld. CIT(A) has erred in law and on facts in not appreciating that the legal heir of the assessee has not challenged the jurisdiction till the date. Hence, the case becomes protected from the provisions of section 292BB of the Act. (e) The Ld CITIA) has erred in not appreciating that the legal heir of the deceased assessee did not respond even during remand proceedings and did not allow the AO to verify the stance that the income was already offered for calculation under the wife's name, taken before CIT(A). (f) Without prejudice to the above, the Ld CIT(A) has erred in not appreciating that the income pertained a period after the demise of the assessee on 14.03.2015 and hence the income ought to have been assessed for the relevant year and the Ld. CIT(A) should have been direction u/s 150 of the Act to assess the income under Estate of Lt. in Pachanbhai Muljibhai Chavda “in the hands of the executors, instead of allowing the appeal of the assessee on technical grounds, even when no such ground has been raised in Farm 35. (g) The appellant craves to add, alter and/or to amend all or any the ground before the final hearing of the appeal.” 3. In this case, notice u/s. 142(1) dated 29-12-2017 was issued to the assessee to prepare a true and correct return of income in respect of which the assessee is assessable under the Income Tax Act, 1961 during the assessment year 2017-18. The Assessing Officer on the basis of data I.T.A No. 1951/Ahd/2024 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 3 analytics and information observed that the assessee has deposited substantial cash in bank account during the demonetization period and has not filed the income tax return. The said data reveals that the assessee deposited total cash of Rs. 22,47,500/- in his bank accounts during the demonetization period. The assessee has not filed return u/s. 139 and has not responded notice issued u/s. 142(1) of the Act and has also not explained the source of cash deposits made in the old currency. Since the assessee has not responded, the Assessing Officer made addition of Rs. 1,47,28,204/- as unexplained money u/s. 69A of the Act. The Assessing Officer further taxed the said amount u/s. 115BBE of the Act @ 60%. 4. Being aggrieved by the assessment order, the assessee filed the appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The ld. D.R. submitted that the CIT(A) has erred in law thereby observing that the legal heir of the assessee nor challenged the jurisdiction till the date and hence the case become protective from the provisions of section 292B of the Act. The ld. D.R. further submitted that the CIT(A) ignored the fact that the legal heir of the deceased assessee did not respond even during remand proceedings and did not allow the Assessing Officer to verify the stance that the income was already offered for calculation under the white name payment before CIT(A). Admittedly the legal heir of the deceased assessee was continuing the business of the I.T.A No. 1951/Ahd/2024 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 4 assessee during demonetization period through his bank account using his PAN after his death without intimating the Department and without surrendering the PAN as per law was not justified. The Ld. D.R. submitted that the CIT(A) erred in quashing the assessment order and deleted the addition on account of unexplained credit transaction reflected in bank account ignoring the fact that there was a cash deposit in the bank account of the deceased assessee during relevant year which was much after the death of Shri Panchanbhai Muljibhai Chavda and therefore the Assessing Officer was under bonafide belief that the assessee was alive when he issued the notice. 6. The ld. A.R. submitted that the Assessing Officer in para 6 has categorically mentioned that the ward inspector deputed for the purpose of delivering the show cause notice to the legal heir Shri Panchanbhai Muljibhai Chavda by requesting the legal heir of the assessee to furnish the details on or before 23-12-2019. Thus, the Assessing Officer was very well aware that Shri Panchanbhai Muljibhai Chavda is deceased. The ld. A.R. relied upon the Hon’ble Gujarat High court in case of Kanubhai Dhirubhai Patel vs. ITO (2022) 444 ITO 405 wherein it is held that when the Assessing Officer issued notice u/s. 148 and assessee has to file return on 31-03-2021 the legal representative of the assessee if informed about the death of the assessee, then the Assessing Officer should issue notice to the legal representative and the notice issued become invalid and should be quashed. The ld. A.R. also relied upon the I.T.A No. 1951/Ahd/2024 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 5 decision of jurisdictional High Court in the case of Rasid Lala vs. ITO (2017) 77 taxmann.com. 39. 7. We have heard both the parties and perused the materials available on record. It is pertinent to note that the Assessing Officer was very well aware about the death Shri Panchanbhai Muljibhai Chavda which is clearly mentioned in para 6 of the assessment order and therefore subsequent notice should have been issued to the legal heir of the deceased assessee. Besides this, the Assessing Officer has passed the assessment order in the name of dead person and therefore the same cannot sustain. Therefore, the assessment order itself is invalid and the CIT(A) has rightly allowed the appeal of the legal heir of the deceased assessee. Hence, the appeal filed by the Revenue is dismissed. 8. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 29-04-2025 Sd/- Sd/- (Makarand V. Mahadeokar) (Suchitra Kamble) Accountant Member Judicial Member Ahmedabad : Dated 29/04/2025 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. I.T.A No. 1951/Ahd/2024 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 6 By order/आदेश से, उप/सहायक पंजीकार आयकर अपील\u0012य अ\u0013धकरण, अहमदाबाद "