SHAILESHBHAI BHAGVANBHAI PATEL,PATAN vs. THE ITO, WARD-1, PATAN

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ITA 235/AHD/2025Status: DisposedITAT Ahmedabad07 July 2026AY 2013-149 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment of the deceased mother's income should have been made in the hands of the legal heirs in their capacity as legal heirs, not in their individual capacities. The AO's action of assessing the income in the assessee's individual capacity was a violation of law.

What were the facts?

The assessee's case was reopened for AY 2013-14, with an addition made on account of investment by his deceased mother. The Assessing Officer (AO) treated 50% of the investment as unexplained money in the assessee's individual capacity.

What were the issues?

Whether the income of a deceased person can be assessed in the hands of a legal heir in their individual capacity instead of their capacity as a legal heir. Whether the AO correctly applied Section 69A for unexplained investment by a deceased person.

Which sections of the Income-tax Act were involved?

Section 159,Section 147,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Mehul K. Patel, Advocate, Shri Santosh Kumar, Sr.DR
For Respondent: Shri Santosh Kumar, Sr.DR
Hearing: 07/07/2026

PER ANNAPURNA GUPTA, AM:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 27.09.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 2 – referred to as the “Act”) and relates to Assessment Year (A.Y.) 2013-14.

2.

The appeal is delayed for filing by 65 days. The assessee has submitted the reasons for the delay in the duly sworn affidavit stating that he did not have any taxable income; was not filing any return of income and was not conversant with using of computers and Faceless Technology and, therefore, could not take prompt action of filing appeal against the order passed by the NFAC. That on becoming aware of the passing of the order of NFAC, he immediately contacted his Advocate at Patan who advised him to file appeal before the ITAT, Ahmedabad. That thereafter, all papers were sent to the Advocate at Ahmedabad and the appeal was filed though with a small delay of 65 days. He pleaded that grave injustice would be caused to the assessee if appeal is not entertained on account of technicality of the delay being not condoned, since, in his case addition to the tune of Rs.13,66,323/- has been made when the assessee has no taxable income at all and the addition has been made grossly in an unjustified manner. It was pointed out that the addition made pertained to investment made by his mother who was since deceased and as per law, the addition could not have been made in his hands in his individual capacity, but, could have only been made in his capacity of legal heir of his deceased mother. Therefore, he stated that the, addition made was grossly unjustified. He pleaded, therefore, that he appeal be entertained for hearing and the delay be condoned.

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 3 – 3. Ld. DR objected to the same.

4.

Having heard the contentions of both the parties. We find the assessee to have adduced sufficient cause for the delay of 65 days in the filing of the appeal and we, accordingly, condone the same. Order was pronounced in the open Court.

5.

Proceeding to adjudicate the appeal, brief facts relating to the case are that the assessee’s case was reopened and assessment framed u/s.147 of the Act making addition on account of investment made by his late mother during the impugned year on account of premium paid for conversion of her land to the Revenue Authorities, the source of which, remained unexplained. During the course of investigation proceedings conducted by the ADIT (Inv.), Mehsana, with respect to tax evasion petition in the case of assessee’s mother Late Smt. Samuben Patel, it came to the light that assessee along with her sister, namely, Ratnaben Patel had paid sum of Rs.2,16,03,200/- in two parts; i. Rs.1,54,67,100/- on 23.05.2012 and ii. Rs.61,36,100/- on 20.08.2012 to the Revenue authorities towards premium for conversion of their land bearing Survey Nos. 1130 & 1132 situated at Annavada Patti, Patan jointly held by Smt. Samuben Patel and her sister Ratnaben Patel in their names. As per the records of the Department, Late Smt. Samuben Patel did not file her return of income for the impugned year i.e. A.Y. 2014-15. After the death of Late Smt. Samuben Patel the property was transferred to her 8 legal heirs including the

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 4 –

assessee. The AO, therefore, held that the onus with respect to the premium amount paid by his mother devolved upon the assessee. Accordingly, re-assessment proceedings were initiated. During the course of re-assessment proceedings, the assessee explained the source of the impugned investment made attributing it to majority of the amount as paid by the sister Smt. Ratnaben Patel and part being paid by the assessee’s mother from amounts received from Malhar Developers. The AO, however, held 50% of the total investment so made amounting to Rs.1,09,30,586/- as unexplained money of the assessee u/s.69A of the Act and added the same to the income of the assessee, which was confirmed by the Ld. CIT(A).

6.

Aggrieved by the same, the assessee has come up in appeal before us raising following grounds:

“(1) That on facts, and in law, the learned AO has grievously erred in re-opening the individual assessment of the appellant. (2) That on facts, and in law, the learned NFAC has grievously erred in confirming the addition of Rs.13, 66, 323/- made u/s 69A of the Act being 1/8th share of Rs.1,09,30,586/- in respect alleged unexplained source premium by Late Smt. Samuben Joitaram Patel of payment of (3) The appellant craves leave to add, alter, amend any ground of appeal.”

7.

We have heard both the parties and have also gone through the orders of the authorities below. It is an undisputed fact that the unexplained money being added in the hands of the assessee

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 5 – was in fact, the investment made by the assessee mother in the form of premium paid for conversion of the land belonging to her, which, she co-owned with her sister Smt. Ratnaben Patel. The mother of the assessee admittedly is deceased. The AO had assessed income in the hands of the assessee stating that after death of mother of the assessee Late Smt. Samuben Patel, the property was transferred to her 8 legal heirs which included the assessee also and, therefore, the onus with respect to the premium amount paid by his mother devolved upon him. This, we find, is completely against the provisions of law. When admittedly it is the amount of investment made by a deceased person, the assessment of the same as per law is required to be made in the hands of the legal heirs in their capacity as legal heirs and not in their individual capacity. Section 159 of the Act specifically deals with the situation where a person dies and categorically provides that it is the legal representative of such person who is liable to pay any sum arising on account of the income of deceased person and for the purpose of making assessment, any proceedings which could have been taken against the deceased if he had survived, may be taken against the legal representative. Such legal representative is not personally liable for any tax payable only, but, only if he creates a charge or disposes of or parts with any assets of the estate of the deceased, which are, or may come into, his possession, but, such liability shall be limited to the value of asset so charged, disposed of or parted with. Provisions of Section 159 of the Act are reproduced hereunder:

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 6 –

“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. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with. (5) The provisions of sub-section (2) of section 161, section 162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative. (6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability.”

It is evidently clear from the above that the law provides a method for assessing incomes of persons, deceased since, otherwise in the absence of such provisions, no assessment can be made of a non- living person. Procedure prescribed as per law is that the legal representative of the deceased person shall be assessed with respect to the income of the deceased person and will be liable to discharge the liability of the deceased person to the extent of

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 7 – assets inherited by him from the said deceased person. The legal representative shall not be personally liable for discharging liability of the deceased person and he shall be assessed for the income of the deceased person in his capacity as his legal heir. Now, in the facts of the present case, the AO though is aware of the fact that the assessment is the income of the mother of the assessee who is deceased, he has not proceeded to assess income in the hands of the assessee as legal heir, but, has assessed it in his individual capacity, which, we hold, is grossly against the provision of law. By assessing income of the deceased mother of the assessee in the hands of the assessee in his individual capacity, he has enabled himself to make recovery of the tax liability, if any, even from the personal assets of the assessee, which is clearly prohibited by law. In the facts in the present case where admittedly, there were 8 legal heirs of the deceased assessee, the AO was required to implead all the legal heirs of the deceased lade Late Smt. Samuben Patel bringing on record all the legal heirs together. The AO in fact it has been pointed out to us, has framed assessment in the hands of the all the 8 legal heirs individually with respect to the same income relating to investment made in land owned by Late Smt. Samuben Patel adding the same amount of Rs.1.01 Crores in the hands of all 8 such legal heirs. Copies of assessment orders passed in the case of the other legal heirs i.e. Arvindbhai M. Patel, Naniben B. Patel, Kalpeshkumar B. Patel, Nimesh B. Patel, Pankajkumar B. Patel and Shaileshkumar B. Patel were filed before us at paper book page nos. 33 to 61. From

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 8 – the same, it was pointed out that in the case of Arvindbhai M. Patel, no addition was made by the AO in the case of Naniben B. Patel also no addition was made by the AO. In the case of Kalpeshkumar B. Patel, it was pointed out that the AO had made addition of 1/8th portion of the alleged contribution of their mother amounting to Rs.13,66,323/-. In the case of Nimesh B. Patel, it was pointed out that the AO has made addition of Rs.13,71,595/-. In the case of Pankajkumar B. Patel, he pointed out that the AO had made addition of 1/8th portion of contribution made by the mother and in the hands of the assessee, the AO had made addition of the entire amount of investment made by the mother of Rs.1.09 crore. Thus, it is evident that the AO had proceeded to assess income on account of unexplained money of Late Smt. Samuben Patel in the hands of the legal heirs. In some cases, he accepted the explanation of the source of investment. In some cases, he made addition to the extent of their share in the estate of the deceased mother, while in the case of the asessee, he added the entire amount of investment to the income of the assessee. The Ld. CIT(A) though, we note, has restricted the addition to the extent of assessee’s share in the state of the deceased mother, but, at the same time, since, it is the income of the deceased mother of the assessee which is being sought to be assessed, law requires the same to be assessed in the hands of the legal heirs in their capacity as legal heirs and not separately in the hands of the legal heirs in their individual capacity as done by the AO. For this reason

ITA No.235/Ahd/2025 [Shaileshbhai Bhagvanbhai Patel vs. ITO] A.Y. 2013-14 - 9 –

alone, the assessment order passed, we hold is in clear violation of law and, therefore, not sustainable.

8.

In the result, appeal filed by the assessee is allowed.

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 07.07.2026

Sd/- sd/- (SIDDHARTHA NAUTIYAL) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 07/07/2026 S. K. SINHA आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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