CHANDRIKABEN RATILAL SONI LR HARSHADBHAI RATILAL SONI,AHMEDABAD vs. INCOME TAX OFFICER WARD 5(2)(2), AHMEDABAD, AHMEDABAD

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ITA 1293/AHD/2026Status: DisposedITAT Ahmedabad01 September 2026AY 2017-189 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that passing an assessment order in the name of a deceased assessee, who expired during proceedings, is an irregularity, not an illegality. The matter was restored to the AO to bring the legal representative on record and reframe the assessment.

What were the facts?

The assessee declared income for AY 2017-18, but the Assessing Officer (AO) treated cash deposits of Rs. 71,63,000/- during demonetization as unexplained. The assessee passed away during assessment proceedings, and the order was completed in her name.

What were the issues?

Whether an assessment order passed in the name of a deceased assessee is void ab initio, and the treatment of unexplained cash deposits made during demonetization.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 69A,Section 145(3),Section 159

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI NARENDRA PRASAD SINHA & SHRI SANJAY KUMAR

For Appellant: Shri Satish Kumar Solanki, AR
For Respondent: Shri R. V. Aroon Prasaad, CIT-DR
Hearing: 04.08.2026Pronounced: 01.09.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the Assessee against the order of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 15.09.2025 for the Assessment Year (A.Y.) 2017-18 in the proceeding u/s 143(3) of the Income Tax Act [hereinafter referred as “the Act”].

2.

There was delay of 134 days in filing of this appeal. A condonation application has been filed by Shri Harshadbhai Ratilal Soni, son and legal heir of the deceased assessee, explaining that her mother had passed

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 2 away in the course of assessment proceeding on 05.12.2019. The order of the Ld. CIT(A) was received on e-mail id of the deceased mother, which was not accessed in time. He came to know about the order of Ld. CIT(A) only after penalty proceeding was initiated. As a result, there was delay in filing of this appeal. Considering the explanation of the assessee, the delay in filing of the appeal is condoned.

3.

The brief facts of the case are that the assessee had filed her return of income for A.Y. 2017-18 on 29.10.2017 declaring total income of Rs.4,50,917/-. The case was selected for complete scrutiny under CASS. The Assessing Officer (AO) had noticed that the assessee had made cash deposit of Rs.71,63,000/- in her bank account with State Bank of India (SBI) during demonetization period from 09.11.2016 to 30.12.2016. The AO was not satisfied with the explanation of the assessee regarding the source of cash deposits. Therefore, the entire cash deposit was treated as unexplained and assessment was completed u/s. 143(3) of the Act on 24.12.2019 at total income of Rs.76,13,920/-.

4.

Aggrieved with the order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

5.

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

1.

The Ld. CIT(A) failed to appreciate the fact that the AO erred in law by proceeding to complete the assessment in the name of a deceased person. The order passed by the AO is therefore, void & illegal.

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 3

2 The CIT(A) erred in law and on facts by making additions of Rs.71,63,000/-u/s. 69A without rejecting the books of accounts U/s. 145(3) of the Income Tax Act. 3. The CIT(A) erred in law and on facts by not appreciating the fact that the deposits in the state bank of India account were made from business receipts duly recorded in the books of account. The addition made u/s.69A is bad in law since, as per the provisions of section 69A addition can be made in respect of money not recorded in the books of account 4 The CIT(A) erred in law and on facts that the AO verified and accepted the purchases made by the assessee, but rejected the sales without any basis. All the purchases and sales are duly supported by bills and vouchers and carried oût through banking channels. 5. The Ld.AO and Ld. CIT(A) erred in not appreciating the fact that since the sales bills were below Rs.2.00.000/-, she was neither required to obtain nor furnish address or other details as per law. small trader. 6. The CIT(A) erred in law and on facts that the assessee, being a has nearly 85 to 90% sales in cash and in earlier years, no additions have been made by the AO. amend. substitute, delete or Your Appellant craves the right to add to or alter, modify all or any of the above grounds of appeal before or at the time of hearing

5.

Shri Satish Kumar Solanki, the Ld. AR of the assessee submitted that the order passed by the AO was void and illegal as the same was passed in the name of a deceased person. He submitted that the fact regarding death of the assessee was brought to the notice of the AO vide letter dated 24.09.2019 filed before the AO. Still the AO had passed the order in the name of the deceased person, which was not correct. He submitted that as per various judicial precedent, the assessment order passed in the name of the deceased assessee is ab initio void. On merits, the Ld. AR submitted that the assessee was engaged in the business of trading of gold & diamond ornaments and the cash deposits in the bank account represented her sale proceeds. He explained that the copy of the cash book were also brought on record and the AO was not correct in rejecting the explanation of the assessee.

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 4 6. Per contra, Shri R. V. Aroon Prasaad, the Ld. CIT-DR submitted that the assessee was very much alive on the date of issue of notice u/s. 143(2) of the Act, and thus the jurisdiction was rightly assumed by the AO. He submitted that the assessee had informed the AO vide letter dated 24.09.2019 that the assessee had expired on 05.12.2019. However, neither the copy of the death certificate nor details of legal heirs of the assessee was brought on record. Under the circumstances, the AO had passed the order in the name of the deceased assessee which was a mere irregularity. On merits, the Ld. CIT-DR submitted that the assessee did not furnish month wise details of cash sales in order to establish that the cash sales were regular feature of the business of the assessee. Under the circumstances, the AO had rightly rejected the contention of the assessee that the cash deposits in the bank account represented cash sales. He, therefore, strongly supported the order of the lower authorities.

7.

We have considered the rival submissions. So far as initiation of assessment proceeding is concerned, the assessee was very much alive on the date of issue of notice u/s. 143(2) of the Act. Therefore, the jurisdiction was validly assumed by the AO in the present case as the notice was served on the assessee when she was alive. The assessee had expired in the course of assessment proceeding and the AO was informed about this fact vide letter dated 24.09.2019. But, neither the death certificate nor the details of legal heirs was brought on record before the AO. At the same time, we do not have any evidence that the AO had inquired about the legal heirs of the assessee after he was made aware about the death of the assessee. The issue of validity of assessment order in the name of the deceased person, when the assessee had expired in the course of assessment proceeding, was examined by this Tribunal in

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 5

ITA No. 1741/Ahd/2024 dated 24.09.2025. It was held therein that the passing of assessment order in the name of the deceased assessee, who had expired in the course of assessment proceeding, was only an irregularity and not an illegality. The findings given in that case is reproduced below:

12.

In the present case the jurisdiction was correctly assumed by the AO and the assessee had expired in the course of the assessment proceeding. The provision of section 159 of the Act prescribes the liability of the legal representatives as under:

Legal representatives. 159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),—

(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;

(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and

(c) all the provisions of this Act shall apply accordingly.

(3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. 13. The proceeding under section 147 of the Act, in the present case, was initiated against the deceased before his death, and hence, clause (a) of sub-section (2) of section 159 of the Act is applicable in the facts of this case. The said clause provides that in the eventuality where a proceeding has already been initiated against the deceased before his death, such proceeding shall be deemed to have been taken against the legal

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 6

representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased.

14.

As per scheme of the Act the AO gets jurisdiction under the Act for assessment upon suo moto filing of return by the assessee or by issue of notice requiring him to file the return. In the present case, the assessment proceeding for the escaped income was initiated by issue of notice under Section 148 of the Act and, therefore, the AO was vested with jurisdiction over the case. There was valid notice, as it was issued when the assessee was alive and the issuance of valid notice conferred power upon the AO to assume jurisdiction for initiation of proceedings for assessment of escapement of income. It is a cardinal proposition in law that not issuing notice at all or issuing that beyond statutory period or issue of an invalid notice under Section 148 does affect the jurisdiction of AO and would make the assessment/reassessment "null and void" because the notice under this section is not a mere procedural requirement but a condition precedent to assume jurisdiction and to make a valid assessment/reassessment. There was no such infirmity in the notice issued in the present case and, therefore, the assessment completed pursuant to such valid notice can’t be held as invalid, without jurisdiction and void ab initio.

15.

The Hon’ble Gujarat High Court has held in the case of CIT v. Sumantbhai C. Munshaw (decd.) 5 Taxman 27 (Gujarat) that a decree against a dead person is not a nullity for all purposes. According to the Hon’ble High Court the assessment order in the name of the deceased person, where the jurisdiction was validly assumed while the assessee was alive, would be a mere irregularity and not a nullity. To quote from the said order:

“29. The foregoing discussion shows that s. 159, which merely prescribes the method for making assessment of tax in a special case, does not bear upon the initial jurisdiction of the taxing authority but deals with matters incidental to it. If the assessing authority, in the exercise of his jurisdiction, omits to take one or more of the various procedural steps therein laid down or in taking any of such steps commits an error or even deviates from the statutory mandate, the assessment would be null and void, only if the omission, error or breach, as the case may be, is so fundamental as could not be waived because it affects inherent jurisdiction. The legal representative has a right to waive the advantage of any of the statutory provisions made solely for his protection or benefit and not conceived in public interest. Therefore, if the legal representative (which term includes plurality of persons) is present before the taxing authority in some capacity or voluntarily appears in the proceeding without service of notice or upon service of notice not addressed to him but to the deceased assessee, and does not object to the continuance of the proceeding against the deceased person and is heard by the ITO, in regard to the tax liability of the deceased and invites an assessment on merits, such a legal representative must be taken to have exercised the option of abandoning the technical plea that the proceeding has not been continued against him, although, in substance and reality, it has been so continued. If and when an assessment order is consequently made in such a proceeding in the name of the deceased assessee, even that would not be a nullity qua

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 7

the legal representative, not only because he was afforded a full opportunity of being heard in respect of it but also because he having not raised an objection at the appropriate time with regard to the continuance of the assessment proceeding against the deceased person, he must be taken to have known the inevitable outcome of the assessment being made in the name of the deceased and to have opted to treat such an assessment as having been made as the legal representative against him and to waive any objection as to its nullity on the said ground. Such an exercise of option on his part is not against public policy or public morality because the waiver is of a statutory provision which is conceived not in public interest but in the interest of the legal representative. It is obvious, therefore, that under such circumstances, the contravention of the relevant statutory provision would be a mere irregularity may be a gross irregularity, but not a nullity.”

16.

In the present case no objection was raised by the legal representatives in the course of hearing with regard to the continuance of the assessment proceeding against the deceased person. The legal representatives of the assessee were aware of the continuing assessment proceeding against the deceased assessee and also had made compliances before the AO after his death. The death certificate of the assessee was issued on 05/11/2020, the AO was informed about the death on 19th February, 2021 and the death certificate was uploaded before the AO only a few days before the limitation date. Further, the detail of legal heirs of the assessee was never brought on record. Considering these facts, as held by the Hon’ble Gujarat High Court in the case of Sumantbhai C. Munshaw (supra), the passing of assessment order in the name of deceased assessee was a mere irregularity and not a nullity. The Hon’ble Court had further held in that case that “if at the date of death of the deceased assessee, the assessment proceeding had commenced, it would not be necessary to start the proceeding afresh, against the legal representative, since any proceeding taken against the deceased prior to the date of his death is deemed as having been taken against the legal representative. It would be necessary, therefore, to determine who the legal representative is and take all further steps in the proceeding against him. The legal representative would have to be given full opportunity of being heard before an assessment is made on him in respect of the estate of the deceased.”

17.

An identical issue was involved in the case of Smt. Hansaben Vinodbhai Parmar (Legal Heir of Late Shri Vinodbhai Motibhai Parmar) Vs ACIT/DCIT Circle, Gandhinagar (ITA No. 58/Ahd/2024 dated 12-06- 2024) decided by the Co-ordinate Bench of this Tribunal (authored by Ld. Judicial Member). It was held therein that since the assessment proceeding had commenced against the assessee at the time the assessee was alive, the proceedings cannot be brought to a nullity only because the legal heirs had failed to intimate the tax department regarding the death of the assessee. In such a case, the assessing officer can continue the proceedings against the legal heirs, in accordance with law and thereafter pass assessment order after giving due opportunity of hearing to the legal representative to present its case on merits. The matter was restored to the file of assessing officer to bring the legal heirs of the deceased assessee

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 8 on record and thereafter, continue proceedings against them after giving due opportunity of hearing to the legal heirs of the assessee to present the case on merits. Reliance was placed in that case on the judgement of Hon’ble Karnataka High Court in the case of CIT v. Shri. I. Mahabaleshwarappa [IT Appeal No. 561 of 2013, dated 16- 6- 2021] wherein it was held that when the assessee expired after the hearing was over and the assessment order was passed by the Assessing Officer subsequent to the death of the assessee, such assessment order was not void ab initio. The Hon’ble High Court, had set aside the matter the Assessing Officer directing him to issue notice to the legal representatives of the deceased assessee and thereafter to pass a fresh order of assessment. Reliance in this respect was also placed on the judgements of other Hon’ble High Courts in that case. An identical view was taken the Co-ordinate Bench of this Tribunal in the case Haresh Dayashankar Srivastava, in ITA No. 684/Ahd/2025 dated 24.07.2025, relied upon by the Ld. Sr. DR. 18. In view of the above facts and the judicial decisions, we are of the considered view that passing the assessment order in the present case in the name of deceased assessee, who had expired in the course of assessment proceeding, was only an irregularity and not an illegality. It was a defect which could be corrected and the assessment can’t be held as ab initio void for this reason. The non-issue of notice to legal representatives of the deceased assessee did not invalidate the assessment order and at best it was a defect which was liable to be corrected and as such it was not a case fit for cancellation of the assessment. Respectfully following the provision of the law and the above judicial precedents, we hereby restore the matter to the file of the AO with a direction to bring the legal representative of the deceased assessee on record and thereafter reframe the assessment in the name of legal heirs of the deceased assessee in accordance with law and after allowing proper opportunity of being heard to the legal representatives.

8.

Respectfully following the judicial precedent and the provision of law, we restore the matter to the file of the AO with a direction to bring the legal representatives of the deceased assessee on record and, thereafter, reframe the assessment in the name of legal heirs of the deceased assessee in accordance with law, after allowing proper opportunity of being heard to the legal heirs. The assessee will be free to make submissions in respect of the cash deposits in the bank account of the deceased assessee in the course of set aside proceeding.

ITA No. 1293/Ahd/2026 Chandrikabehn Ratilal Soni Lr Harshadbhai Ratilal Soni, AY- 2017-18 9

9.

In the result, the appeal of the assessee is allowed for statistical purpose.

Order pronounced in the Court on 01/09/2026 at Ahmedabad.

Sd/- Sd/- (SANJAY KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 01st September, 2026 Neelesh, Sr. PS (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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