Cash deposit cannot be shifted from live person to a deceased just because he was joint holder

Cash deposit in bank account cannot be shifted from a live person to a deceased assessee just because he was joint holder – ITAT

In a recent judgment, the Hon’ble ITAT has quashed asssessment order on a deceased person holding that cash deposit in the bank account cannot be shifted from a live person to a deceased assessee just because he was one of the joint holders of the account.

ABCAUS Case Law Citation:
ABCAUS 3972 (2024) (04) ITAT

In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre (NFAC) in confirming ex-parte assessment order passed u/s 144 of the Income Tax Act, 1961 (the Act) in the name of a deceased assessee.

The appellant assessee had died in the one year before the relevant financial year. The widow of the assessee during demonetisation period falling under the relevant assessment year had deposited cash in her bank account. The said bank account was joint account between the deceased assessee and his widow.

The widow of the assessee had disclosed the amount of cash deposited in the said bank account in her return of income filed for the relevant assessment year.

The AO issued notice u/s 142(1) of the Act on the deceased assessee on the ground that cash had been deposited in his bank account and as there was no return filed by him. Subsequently the AO completed the impugned best judgment assessment u/s 144 of the Act.

Before the Tribunal the counsel submitted that the assessee having died one year before the relevant financial year and the bank account had been operated by his wife who had filed her return of income disclosing the said bank account and the transaction therein for the relevant assessment year, the assessment on the deceased assessee was invalid.

It was the submission that the return of the income of the deceased assessee for preceding assessment year had been filed by his wife as the legal heir. That the wife of the deceased assessee had also filed her own return for the preceding assessment year and the assessment u/s143(3) of the Act had also been done on her.

It was the submission that the return disclosing the entire transaction by the wife of the deceased assessee for the relevant the assessment year was filed and disclosure of cash deposit was shown in Serial No. D-21 of the return related to disclosure of bank account wherein the amount of cash deposited in bank was duly disclosed under the column “cash deposited during 09.11.2016 to 30.12.2016 (if aggregate cash deposit during the period > = Rs. 2 lakhs)”

The Revenue contended that Section 159 of the Act will apply in the case of the assessee and the assessment should be considered as of legal representative.

The Tribunal rejected the contention that provision of Section 159 of the Act applies as the wife of the deceased herself had filed her return in her individual capacity for the relevant assessment year much before the notice issued on the deceased assessee.

Further, the Tribunal observed that as confirmed from the death certificate, the deceased assessee was not alive even for one day during the relevant assessment year.

The Tribunal opined that a cash deposit in the bank account of the assessee and which had been offered by wife cannot be shifted from a live person to a deceased assessee just because he was one of the joint holders of the account.

In the light of the above facts, the Tribunal quashed the assessment made u/s144 of the Act on the deceased person.

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