LATE RAMESH MOHANLAL JAIN (THROUGH LEGAL HEIR MRS. BHAVNA RAMESH JAIN),MUMBAI vs. INCOME TAX OFFICER, PIRAMAL CHAMBERS, MUMBAI

On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in initiating penalty proceeding /272At1lId) in the name of deceased person and the reasons assigned for doing so are wrong and contrary to the facts and the provisions of the low.

On the facts and under the circumstances of the case and in law, the learned Assessing Officer has erred in initiating penalty proceeding u/s 271AAC(1) in the name of deceased person and the reasons assigned for doing so are wrong and contrary to the facts and the provisions of the law.

On the facts and under the circumstances of the case the learned Assessing Officer has erred in calculating the Interest u/s 234A amounting to Rs. 6,41,799/-

On the facts and under the circumstances of the case the learned Assessing Officer has erred in calculating the interest u/s 234B amounting to Rs. 7,30,323/-.”

Brief facts of the case are that certain information was received by the Assessing Officer (AO) through Actionable Information Monitory System (AIMS) of ITBA System and SFT-Financial transactional details that the assessee has made cash deposit during demonetization period and had not filed his return of income in spite of depositing huge cash in his bank account. The total cash deposits, doubted by the AO were amounting to Rs. 5,21,12,072/- in the relevant year. Notices were issued to the assessee, however the assessee failed to comply with the same and have not furnished the details called for from him. Subsequently a response was furnished by the assessee’s son Shri Jatin Ramesh Jain stating that the assessee i.e. Ramesh Mohanlal Jain has committed suicide on 04.10.2019 and the son of assessee was not aware about those notices. Assessee’s son also furnished details of cash deposits during demonetization period as well as during Late Ramesh Mohanlal Jain the entire FY 2016-17, he tried to explain the source of such deposits, however, the AO did not find those explanations sufficient and satisfactory, therefore an amount of Rs. 61,80,564/- was added as estimate at 12% on the total transactions of cash deposit by the assessee amounting to Rs. 5,15,04,700/- during the year and the remaining amount of Rs. 6,26,000/- deposited in demonetisation period treating it unexplained money under section 69A of the Act.

Aggrieved with the aforesaid additions, assessee preferred an appeal before the ld. CIT(A), however ld. CIT(A) had not deliberated upon the merits of the issues also have not offered any observation qua the completion of assessment in the hands of a deceased person. The assessment was completed following the provisions of section 144 of the Act on best judgment assessment, therefore ld. CIT(A) using the powers available under section 251(1) had restored it back to the file of AO for de novo assessment in accordance with statutory provisions of the Act.

Being dissatisfied with the aforesaid decision by the ld. CIT(A), assessee preferred the present appeal which before us for our consideration.

At the outset, ld. AR representing the assessee submitted that the demise of assessee was duly informed to the ld. AO by the son of assessee during the Late Ramesh Mohanlal Jain proceedings before him, according to which the assessee was passed away on 04.10.2019, inspite of knowing this fact which is duly recorded in the assessment also at para-9 page 5 of the order, the AO has completed assessment against the dead person, which is not permissible under the settled position / mandate of law. The ld. AR placed his reliance on the following judgments: (i) Neena Jatin Shah vs. ITO [2025] 179 taxmann.com 498 (H.C. Bom.) (ii) Amjad Ahmed Shaikh vs. ITO [2025] 172 taxmann.com 687(H.C. Bom.) (iii) /assessee even after having knowledge of the demise of the said person/ assessee, the impugned notice issued and order made based thereon, could not bind the legal representatives, thus liable to quashed and set-aside. It is further explained through the order in the case of Neena Jatin Jain vs. ITO (supra) wherein the department was intimated about the death of the assessee and the fact is noted in the departments order, Hon’ble Mumbai High Court has held that : “4. Despite this, for A.Y. 2018-19, proceeding for re-opening the assessment of the deceased Assessee, Jatin Bhagwandas Shah, has been initiated in August 2024. It is now well settled that notice under Section 148 cannot be issued to a dead person, and if it is done, the same is null and void. Late Ramesh Mohanlal Jain

In light of the aforesaid decisions, we are clearly of the view that the impugned notices as well as the impugned order are not valid and cannot be allowed to stand.

It is clarified that this order will not prohibit the Revenue from issuing a fresh notice to the legal heirs of the deceased Assessee Jatin Bhagwandas Shah if the requirements of Section 147/148 of the IT Act are satisfied, including the limitation period therein.”

In backdrop of aforesaid submissions, it was the prayer by ld. AR that the orders passed by the AO and ld. CIT(A) in the name of deceased person has no validity in the eyes of law, the same therefore are at nullity and should be strucked down.

Per contra, ld. Sr. DR vehemently supported the orders of revenue authorities and submitted that the matter has rightly been restored back to the file of AO in absence of non-compliance by the assessee before AO, therefore, the order of ld. CIT(A) deserves to be upheld.

We have considered the rival submissions, perused the material available on record and case law relied upon by the parties. Admittedly in present case the proceedings were initiated against the assessee by issuance of notice under section 142(1) on 09.03.2018, the assessee thereafter died on 04.10.2019, therefore at the time of proceedings initiated the assessee was alive, however no compliance were Late Ramesh Mohanlal Jain made by the assessee, mean time when the assessment proceedings were ongoing, the assessee committed suicide on 04.10.2019, undoubtedly, this fact was placed before the ld. AO by the son of the assessee. However, the AO under his pre- conviction had not taken this vital fact seriously and have proceeded to complete the assessment against a deceased person. Similarly, the ld. CIT(A) also completed appellate proceedings against the deceased person by setting aside the matter back to the file of AO, also have not offered any finding on this issue raised by the assessee. Under such facts and circumstances, respectfully following the jurisprudence on the issue, as per settled principles, no proceedings can be initiated against deceased person, specifically when such information was informed to the revenue. Accordingly, both the orders i.e. assessment under section 144 and appellate order under section 250 issued in the name of a deceased person cannot sustain, however following the principle emerging from the order of Hon’ble Mumbai High Court in the case of Neena Jatin Jain vs. ITO (supra), the revenue is at liberty to initiate such proceedings against the legal heirs of the deceased assessee, if the requirement of section 147/ 148 are satisfied including the limitation period available therein.

Having given a thoughtful consideration to the aforesaid facts and circumstances, judicial pronouncements and observations herein above, the appeal Late Ramesh Mohanlal Jain of assessee is allowed in terms of our directions to quash the impugned assessment and set-aside the orders of ld. CIT(A) in the present matter. Accordingly, ground of appeal no. 1 & 2 of the present appeal of the assessee are allowed.

Since we have quashed the assessment and set-aside the order of ld. CIT(A) being completed and passed against a deceased person after his death, thus, stands as null and void, therefore, the remaining grounds of appeal on merits are become infructuous and academic only.

In result, the appeal of assessee is allowed in terms of our aforesaid observations.