ITAT Quashes Reassessment of Deceased Taxpayer Due to False Assumptions

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, ruled in favour of the deceased assessee, holding that the reassessment under Section 147 was invalid due to an incorrect assumption of the assessing officer that no return had been filed.

The assessee, Late Shri Chhatrasinh J. Vaghela, along with other owners, sold the agricultural land in Saragasan, Gandhinagar, for Rs 11,25,62,000 on October 14, 2011. His income tax return (ITR) was filed on 30.03.2014.

Even though the assessee’s legal heir had filed his return, the assessing officer issued a notice under section 148, claiming that the return had not been filed and that the verification of capital gain and other income was required. Based on this, the assessment was reopened by the assessing officer, and the long-term capital gains (LTCG) were recalculated. The assessing officer denied the exemption under section 54B of the Income Tax Act.

The Commissioner of Income Tax (Appeals) [CIT(A)] also confirmed these additions without giving a proper hearing to the legal heir. Therefore, the assessee filed an appeal before the ITAT Ahmedabad.

The Ahmedabad Bench of the Income Tax Appellate Tribunal observed the case and, based on the records, found that the assessee’s return was already filed. The Assessing Officer claimed no return was filed, but the record showed that the return was filed on 30.03.2014, before the notice under Section 148.

Since the very basis of reopening the case was wrong, the Tribunal held that the reassessment was invalid and without jurisdiction. Therefore, the ITAT quashed the assessment.