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

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 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 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%.

Being aggrieved by the assessment order, the assessee filed the appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.

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 Panchanbhai Muljibhai Chavda, A.Y. 2017-18 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.

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

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.

In the result, the appeal filed by the revenue is dismissed.