2018 (8) TMI 2069 - AT - Income Tax

Tribunal Quashes Assessment Orders & Enhancements, Advocates Liberal Tax Credit Consideration

Estate of Late Shri Vrajlal Chandulal Mehta C/o. Shri Anoop Mehta Versus ACIT CC-3 (2), Mumbai

Estate of Late Shri Vrajlal Chandulal Mehta C/o. Shri Anoop Mehta Versus ACIT CC-3 (2), Mumbai - TMI Issues Involved:1. Legality of reassessment order passed in the name of a legal heir instead of the estate of the deceased.2. Enhancement of income by the CIT(A) based on credits in a foreign bank account.3. Credit for taxes paid in a different assessment year.4. Validity and consideration of a revised return of income filed by the appellant.Detailed Analysis:1. Legality of Reassessment Order:The primary issue was whether the reassessment order should have been passed in the name of 'Mr. Anoop Mehta (legal heir of Late Vrajlal Chandulal Mehta)' or the 'Estate of Late Vrajlal Chandulal Mehta.' The assessee argued that the order should be in the name of the estate, not the legal heir, citing sections 159 and 168 of the Income Tax Act, which differentiate between the assessment of income accrued during the deceased's lifetime and the income accrued post-death. The Tribunal agreed, noting that the income assessed for AY 2007-08 was post-death, making the estate the correct taxable entity. The Tribunal quashed the orders passed by the tax authorities, holding that the assessment should be in the name of the estate, not the legal heir.2. Enhancement of Income by the CIT(A):The CIT(A) enhanced the income assessed by the AO by Rs. 14.49 crores based on credits in the HSBC account of Investment Lexcor S.A. The assessee contended that this account belonged to Shri Rajesh Mehta, supported by an affidavit and statements during the search and assessment proceedings. The Tribunal found that the CIT(A) did not bring any new evidence to contradict the claim and relied on the fact that other authorities had accepted Shri Rajesh Mehta's ownership of the account. The Tribunal set aside the CIT(A)'s enhancement, emphasizing that the correct person must be assessed for the income.3. Credit for Taxes Paid in a Different Assessment Year:The assessee sought credit for Rs. 52,44,128/- paid in AY 2012-13 for income now offered in AY 2007-08. The AO and CIT(A) rejected this claim. The Tribunal acknowledged the peculiar circumstances, noting the income was initially offered in AY 2012-13 when received in India and later revised to AY 2007-08 based on the revenue's stance. The Tribunal cited CBDT Circular No.14 and a Gujarat High Court decision, suggesting the revenue should consider the claim liberally when acting on the revised returns.4. Validity and Consideration of Revised Return:The assessee filed a revised return for AY 2007-08, which was rejected by the AO as it was beyond the stipulated time. The Tribunal did not need to adjudicate this issue separately, as it was addressed through the decisions on the other grounds.Conclusion:The Tribunal allowed the appeal, quashing the assessment orders passed in the name of the legal heir and setting aside the CIT(A)'s enhancement of income. The Tribunal also suggested a liberal consideration for the credit of taxes paid in AY 2012-13 when the revenue acts on the revised returns.