Assessments cannot be conducted in the name of a deceased person, rendering such proceedings void ab initio.

आदेश/ORDER

PER SIDDHARTHA NAUTIYAL, JM:

The present appeal has been preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] dated 24/02/2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2017-2018.

2. The Revenue has raised the following grounds of appeal:

“(a) The Led. CITTA) has erred in law and on facts in quashing the notice und consequent assessment and deleting various additions totalling to Rs. 1,73,64,690/- (Rs. 1,41,94,690/- on account of unexplained money and Rs. 31,70,000/-on account of unexplained investment) on the ground that the assessee had expired before issue of Notice u/s. 142(1) of the Act. despite the fact that:

(i) The legal heir of the assessee had not informed the department about) death of assessee at any stage prior to completion of assessment.

(ii) During assessment proceedings, various statutory notices were issued on 21.02.2018, 10.05.2019, 10.06.2019, 23.08.2019 and 20.09.2019 were issued and duly served upon the email id of the assessee. However, the Legal Heir had neither complied the statutory notices nor informed the department about death of assessee. Further, the L/h did not take any steps for registration himself as a legal heir for assessment. Hence, the AO had rightly passed ex-parte order u/s. 144 of IT Act in the name of assessee.

(iii) The L/h of the assessee had not raised ground regarding challenging the validity of Notice u/s. 148 as the same was issued in the name of deceased person.

(b) The Ld.CIT(A) has erred in law and on facts in not deciding the appeal on merits of the case.

(c) The Ld.CIT(A) ought to have set aside the assessment order to the file of the AO to pass the assessment order after taking the legal heir on record.

(d) The appellant craves leave to add, alter and/or to amend all or any the ground before the final hearing of the appeal.”

3. The brief facts of the case are that the assessee, Shri Khodaji Ranchhodji Thakor, an individual residing at Ahmedabad, had not filed any return of income for Assessment Year 2017–18. Based on data analysis conducted by the Income Tax Department under “Operation Clean Money,” it was found that the assessee had deposited substantial cash in various bank accounts maintained with Punjab National Bank during the demonetization period from 9th November 2016 to 30th December 2016. The total cash deposit during this period amounted to Rs. 15,05,500/-, in addition to total credits of Rs. 1,41,84,687/- appearing in multiple savings and current accounts held by the assessee. Since the assessee had not filed any income tax return for the relevant year, the source of these cash deposits remained unexplained. Accordingly, the Assessing Officer (AO) issued a notice under section 142(1) of the Act, on 21.02.2018 requiring the assessee to file a return of income and explain the source of deposits. Despite several notices and reminders issued thereafter, including show-cause notices dated 23.08.2019 and 20.09.2019, the assessee failed to respond or furnish any details or explanation regarding the source of the cash deposits or the nature of his income. As a result, the AO proceeded to complete the assessment under section 144 of the Act — a best judgment assessment — based on the material available on record. During the course of proceedings, the AO obtained information from Punjab National Bank under section 133(6) of the Act. The bank confirmed that substantial cash deposits were made in old currency notes during the demonetization period and that large credit entries had also been recorded throughout the year.