SOUMYALATHA SADANAND SHETTY,MUMBAI, INDIA vs. INCOME TAX OFFICER, WARD 5(1)(4), MUMBAI

ITA 7846/MUM/2025Status: DisposedITAT Mumbai28 September 2026AY 2017-189 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the first ground regarding the invalidity of the appellate order due to the assessee's death was dismissed. The Tribunal found no substance in the contention as the appellate order did not indicate that notices were issued to the deceased or that the assessee objected to such omission. The Tribunal found that the CIT(A) failed to appreciate the facts and circumstances concerning the addition of Rs. 7,95,000 and disallowance of expenses. The CIT(A) rejected additional evidence on a technical ground without adjudicating the issue on merit. Therefore, the Tribunal remitted the entire matter back to the CIT(A) for a de novo order after allowing adequate opportunity of hearing. The grounds related to penalty proceedings under Section 270A were dismissed as premature, as no penalty order had been passed. The ground pertaining to interest under Section 234B was also not adjudicated, being consequential and mandatory. The appeal was partly allowed.

What were the facts?

The assessee, Soumyalatha Sadanand Shetty, filed an appeal against the order of the CIT(A) for Assessment Year 2017-18. The appeal was delayed by 180 days. The assessee had expired on 28.04.2024, and the appellate proceedings, including the first notice and the impugned order, occurred after her demise. The legal heir became aware of the appellate order upon receiving a penalty notice. The Assessing Officer (AO) had finalized the assessment under section 143(3) of the Income-tax Act, 1961, making additions of Rs. 25,92,141/- to the returned income. The assessee's original return declared a total income of Rs. 34,28,149/-, while the AO assessed it at Rs. 60,20,290/-.

What were the issues?

1. Whether the appellate order dated 26.03.2025 is void ab initio and violative of the principles of natural justice, as it was passed after the assessee's death and without proper service of notices, turning on Section 250 of the Income-tax Act, 1961. 2. Whether the CIT(A) erred in confirming the addition of Rs. 7,95,000 as business income, instead of income from other sources, and disallowing expenses of Rs. 12,07,404, concerning guest house rent, turning on Section 143(3) and principles of natural justice. 3. Whether the CIT(A) erred in confirming the treatment of Rs. 14,70,378 (LTCG on non-equity MF) and Rs. 3,00,300 (rental income) as misreporting of income under Section 270A(9), when the assessee voluntarily disclosed and paid taxes before detection, turning on Section 270A(9). 4. Whether the CIT(A) erred in confirming the interest charged under Section 234B, given the assessee was a senior citizen aged 87 and not liable to pay advance tax, turning on Section 234B. Assessee's contentions: The appellate order is void due to the assessee's death and lack of notice. The rent income should be treated as income from other sources, and expenses should be allowed. Misreporting under Section 270A(9) is unjustified for voluntarily disclosed income; it should be under-reporting under Section 270A(2). Interest under Section 234B is not leviable for a senior citizen not liable for advance tax. Revenue's contentions: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 250,Section 270A,Section 270A(9),Section 270A(2),Section 46A,Section 234B,Section 10(38),Section 194IB,Section 234A

AI-generated summary — verify with the full judgment below

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKARSmt.

For Appellant: Mr. Bhavik Chheda, Adv
For Respondent: Shri Basavraj Hiremath,(CIT-DR)
Hearing: 25.08.2026Pronounced: 28.09.2026

PER PRABHASH SHANKAR [A.M.] :- The instant appeal arising from the appellate order dated 26.03.2025 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax, Appeal, ADDL/JCIT(A) - 2, Ahmedabad [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961

P a g e | 2 A.Y. 2017-18 Soumyalatha Sadanand Shetty [hereinafter referred to as “Act”] dated 18.12.2019 for the Assessment Year [A.Y.] 2017-18. 2. The

The order continues below.

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