ITO 17 (1)(3), MUMBAI vs. ESTATE OF LATE SHRI CHANDARAKANT MEHTA, MUMBAI

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ITA 7198/MUM/2019Status: DisposedITAT Mumbai07 June 2021AY 2011-123 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision that the assessment order was void ab-initio because it was framed on a deceased person without proper substitution of legal heirs. The appeal was also dismissed on the grounds of low tax effect.

What were the facts?

The Assessing Officer (AO) made an addition for bogus purchases despite knowing the assessee had passed away and without bringing the legal representatives on record. The notice under section 148 was served on the deceased assessee.

What were the issues?

Whether an assessment order passed on a deceased assessee without bringing legal representatives on record is void ab-initio. Whether the addition for bogus purchases is valid when the assessment itself is void.

Which sections of the Income-tax Act were involved?

Section 148,Section 144

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA, AM & PAVAN KUMAR GADALE, JM

For Appellant: Shri Vijay Kumar Menon
Hearing: 07.06.2021Pronounced: 07.06.2021

O R D E R Per Shamim Yahya, A. M.:

This appeal by the revenue is directed against the order of the learned Commissioner of Income Tax (Appeals)-55, Mumbai (‘ld.CIT(A) for short) dated 30.08.2019 and pertains to the assessment year (A.Y.) 2011-12.

2.

The grounds of appeal read as under:

1. "On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding the assessment order as void ab-initio, when the notice u/s.148 was served on the assessee before his demise and on the addresses provided to the Department as held by the Apex Court in the case of PCIT, Mumbai Vs. l-ven International Ltd." 2. "On the facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the addition of Rs.4,06,276/-- made by the AO in respect of bogus purchases, even in absence of any details by the assessee to prove its genuineness without considering the fact that the aforesaid addition to the total income of the assessee was made by A.O. on the basis of information received from the authoritative external source i.e. Maharashtra Sales Tax Department." 3. "The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of AO be restored." 3. The brief facts of the case are that the assessing officer made an estimated disallowance for bogus purchases despite knowing that assessee is no more. The assessing officer did not bring the legal representatives on record.

2 7198/Mum/2019

4.

Upon assessee appeal Ld.CIT(A) decided the issue in favour of the assessee by holding as under:- In this case assessment order is passed under section 144 of the I T Act . The Assessing Officer contends that notice u/s 148 was served by affixture at the last known addition. In the submission made by the assessee nowhere claims that change of address was ever intimated to the department and therefore this notice u/s 148 is otherwise a valid notice. However it is further noticed from the assessment order the A/R of the assessee duly intimated the Assessing Officer that assessee is no more and though he filed return of income he was not authorised to plead the case before the Assessing Officer. The Assessing Officer had telephonic conversation with brother in law of the deceased assessee and son of the brother in law both of whom intimated that they were not aware of the business dealing of the assessee. The Assessing Officer thereafter issued a final notice by email to the A/R of the assessee who again expressed his inability to give any details. In the appeal memo it has been intimated that assessee expired on 21.07.20:15 and the appeal is filed by his wife and Legal Higher. Considering the facts it is apparent that despite having come to know that the appellant is no more , notice was not served on the Legal Higher. No notice can be served on the deceased assessee. Further notice served or erstwhile assessee who did not have necessary authority serves no purpose. Hence, if notice is served on the Legal Higher in this case the assessment is void and ab-initio. Without prejudice in the details statement of facts, it is seen that the alleged purchases and its corresponding sales have already been accounted for and Gross Profit at the rate 3.7% has been shown on the transaction, There is no suppression in Gross Profit on transactions made and the AO has adopted the figure of income from the original return only besides adding the alleged purchases. Therefore in view of above discussion and facts no addition is called for.

5.

Against this order revenue is in appeal before us.

6.

We have heard the Learned Departmental Representative and perused the records. As clear above, the assessment has been framed on the dead person. Hence, Ld.CIT(A) has taken the correct view of the matter. Furthermore, tax effect in this case is also below the limit by CBDT for filing appeal before the ITAT. As the Ld.CIT(A) has allowed the appeal, on the ground that it is framed on a dead person. Accordingly, we do not find any infirmity in the order of the Ld.CIT(A). Hence, we uphold order of Ld.CIT(A). Assessee’s appeal on the ground that assessment is framed on a dead person.

7.

In the result, this appeal by the revenue stands dismissed.

3 7198/Mum/2019 Order pronounced in the open court on 07.06.2021

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