Income tax demand to be enforced qua the assets, left behind by deceased assessee – ITAT

Income tax demand will be enforced qua the assets, if any, left behind by the deceased assessee – ITAT

In a recent judgment, ITAT has held that income tax demand will be enforced qua the assets, if any, left behind by the deceased assessee as section 159(2) contemplates that taxes will be recovered from the person, who so far as inherited assets of the assessee.

ABCAUS Case Law Citation:
ABCAUS 3922 (2024) (03) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC) confirming the addition made to income.

Before the Tribunal, the Advocate, under whose signature the appeal was filed before the Tribunal stated that the assessee has expired and he has no legal heir.

The Tribunal observed that the Assessing Officer (AO) had passed the impugned assessment order ex-parte under section 144 read with section 147 of the Income Tax Act, 1961 (the Act).

The AO had observed that during the period of demonetisation, assessee had made deposit of large amount of cash in Savings Bank Account. The assessment was reopened under section 147 and notice was issued under section 148 of the Income Tax Act.

The assessee did not appear before the Assessing Officer in response to the notices issued under sections 143(2) an 142(1) of the Income Tax Act. The Assessing Officer has made the addition of cash deposit in the Bank account.

The AO also observed that there were cash credit during this financial year and assessee had carried out some business activities. He estimated the income at 8% of the total credit and in made an addition and determined the taxable income of the assessee.

Appeal to the CIT(Appeals) did not bring any relief to the assessee because no one appeared before the CIT(Appeals) and no explanation regarding source of cash deposited in the Bank account was submitted.

The Tribunal opined that though it had been submitted that the assessee had died and did not leave behind any legal representative, there was no explanation at the end of the assessee about the source of cash deposited in the Bank as well as, as to why income ought not to be estimated at 8% of the alleged cash transactions.

The Tribunal confirmed the additions.

The Tribunal further observed that section 159, sub-section (2) contemplates that taxes will be recovered from the person, who so far as inherited assets of the assessee. In other words, taxes will be recovered against any asset left behind the assessee.

Therefore, it was directed that this demand will be enforced qua the assets, if any, left behind the assessee.

Accordingly, the appeal of the assessee was dismissed.

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• PCIT cannot invoke the revisionary jurisdiction u/s 263 on instance of Assessing Officer
• AO can’t disturb income returned by assessee, without issue of notice u/s 143(2) – ITAT
• Source of cash being sales proceeds of household items upon sale of flat is plausible
• CPC was not justified in making the disallowance u/s 40a(ia) for non deduction of TDS
• No addition when cash deposited in bank was available as cash in hand in the books