Estate of Vasant Patki Vs DCIT (ITAT Mumbai)
The ITAT Mumbai considered an appeal filed by the assessee against the order of the CIT(A), Kolkata, dated 12 November 2025 for AY 2022-23. The assessee had filed its return declaring total income of Rs.11,05,495. While processing the return under Section 143(1), the CPC accepted the returned income but computed tax at the rate applicable to an artificial juridical person (AJP), resulting in a demand of Rs.3,79,957. The assessee filed a rectification application under Section 154, contending that tax should be levied under Section 168 at the slab rates applicable to an individual, but the application was rejected.
Before the CIT(A), the assessee challenged the tax treatment of the estate of Late Shri Vasant Janardan Patki. The CIT(A) observed that Section 168(1) provides for taxation of income of a deceased person’s estate in the hands of the executor. According to the CIT(A), where there is only one executor, the income is taxable as if the executor were an individual, whereas where there is more than one executor, taxation is at the rate applicable to an AOP. The CIT(A) therefore directed application of the maximum marginal rate under Section 167B on the basis that more than one executor was involved.
Before the Tribunal, the assessee contended that the CIT(A) had erred in directing assessment in the status of AOP instead of AJP-estate of the deceased and had also failed to provide an opportunity of hearing. The assessee submitted that the estate of a deceased individual was a legally assessable unit and relied upon Estate of Late Harkishin Bhojraj Chanrai vs. DCIT and Commissioner of Income Tax vs. G.B.J. Seth.
The Tribunal noted that a similar issue had been considered in Estate of Late Harkishin Bhojraj Chanrai. In that case, although there were two executors, the Tribunal had directed taxation of the estate’s income at normal slab rates rather than the maximum marginal rate, relying upon Section 168(1)(b) and the applicable First Schedule to the Finance Act, 2019. The Tribunal also noted the Madhya Pradesh High Court’s decision in G.B.J. Seth, which held that the executors of an estate are assessed as an AOP only for statistical purposes and that, for purposes of rates and similar matters, the assessment is to be treated as being on the assessee or actual beneficiaries.
Respectfully following these decisions, the ITAT Mumbai directed the Assessing Officer to tax the assessee as per normal slab rates and not at maximum marginal rates. The grounds were allowed and the appeal was allowed in full. The order was pronounced on 30 March 2026.
Cases Discussed
- Estate of Late Harkishin Bhojraj Chanrai vs. DCIT (ITAT Mumbai), ITA No.2324/Mum/2021 dated 29.06.2022
- Commissioner of Income Tax vs. G.B.J. Seth (Madhya Pradesh High Court), (1982) 133 ITR 192 (MP)
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Addl/JCIT Commissioner of Income-Tax (Appeals), Kolkata, [in short, ‘CIT(A)’], dated 12.11.2025 for the assessment year (AY) 2022-23.
2. The grounds of appeal raised by the assessee are as under:
“1. On facts and in law, the Ld. CIT(A) erred in assessing the income of the deceased Late Shri Vasant Janardan Patki in the status of an “Association of Persons (AOP)” instead of the status of “AJP-Estate of Deceased” as correctly adopted by the Assessing Officer.
2. The Ld. CIT(A) exceeded jurisdiction u/s 251(1) & 251(2) by changing the assessed status from AJP to AOP without issuing any show-cause notice of enhancement, rendering the order bad in law, void ab initio and liable to be quashed.
3. The Ld. CIT(A) failed to appreciate that an AOP cannot be constituted in the case of a deceased individual’s estate, since the essential element of volition and common purpose among two or more persons is absent, and hence the status of AOP is wholly inapplicable.
4. The Ld. CIT(A) failed to appreciate that the estate of a deceased individual is a legally recognised assessable unit under the Income-tax Act and has consistently been assessed in the status of AJP/estate, and any deviation without legal basis is invalid.
5. The Ld. CIT(A)’s order is contrary to settled law that the executor represents the estate of the deceased u/s 168 and assessment must be made in that status alone.
6. The appellant craves leave to add, alter, amend or withdraw any ground of appeal at the time of hearing.
7. On facts and in law, the CIT(A) erred in ignoring the Probate Order of the Hon’ble Bombay High Court, which recorded the renunciation of three executors, leaving only one acting executor. The failure to consider the probate order renders the CIT(A)’s finding perverse and unsustainable.
8. The CIT(A) erred in holding that merely because a Will originally named more than one executor, the status should be treated as an AOP, without appreciating that (a) three executors had renounced; (b) a renunciation accepted by the Probate Court extinguishes their authority; and (c) an estate administered by a sole executor cannot constitute an AOP under any interpretation of law.
9. The CIT(A) erred in directing application of Section 167B, which applies solely to AOPs, whereas the present case is governed exclusively by Section 168 (assessment of executors). The direction is therefore bad in law and without jurisdiction.
10. The CIT(A) failed to appreciate that a Probate Order passed by a competent court has binding evidentiary value and conclusively determines the status of executors. Ignoring such binding judicial determination is a serious legal error and renders the order void.”
3. Facts of the case, in brief, are that the assessee filed its return of income for the AY 2022-23 declaring total income at Rs.11,05,495/-. The CPC, while processing the return u/s 143(1) of the Act, accepted the income declared by the assessee but computed the tax at the rate applicable to artificial juridicial person (AJP). This resulted in the demand of Rs.3,79,957/-. The assessee filed an application of rectification u/s 154 contending the tax should levied u/s 168 of the Act at the slab rates applicable to an individual. The said application was rejected.
4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) observed that section 168(1) provides that income of the estate of a deceased person shall be chargeable to tax in the hands of the executor. If only there is only one executor, the income will be taxable as if the executor is an individual. If there are more than one executor, it will be taxed at the rate applicable to AOP. Since more than one executors are there in this case are taxation of the assessee will be as if it was an AOP. Taxation of AOP u/s 167B is at maximum marginal rate (MMR), where shares of members in AOP is unknown. The CIT(A), accordingly, directed to apply MMR and compute the tax.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the assessee submitted that the CIT(A) was not correct in directing assessment of the income of the deceased late Shri V.J Patki in the status of ‘AOP’ instead of status of ‘AJP-estate of deceased’. The CIT(A) also did not allow opportunity of hearing to the assessee. He submitted that the estate of the deceased individual is a legally assessable unit in the status of AJP/Estate. The Ld. AR relied on the decisions in cases of Estate of Late Harkishin Bhojraj Chanrai vs. DCIT in ITA No.2324/Mum/2021 dated 29.06.2022 and Commissioner of Income Tax vs. G.B.J. Seth (1982) 133 ITR 192 (MP).
6. On the other hand, the Ld. Sr. DR of the revenue has supported the order of the CIT(A).
7. We have heard both parties and perused the materials on record. We find that similar issue had come up for consideration in case of estate of Late Harkishin Bhojraj Chanrai (supra). In the said case there were two executors. The assessee had computed tax as per normal tax slab rates. However, the CPC computed tax liability at maximum marginal rates. The ITAT allowed appeal of the assessee by deciding as under:
“09. We have carefully considered rival contentions and perused orders of lower authorities. Undisputed facts though the assessee has filed its return of income declaring an income of ₹1,288,261/- in the status of association of person of estate of a diseased individual. The tax liability is required to be computed as per the normal tax as applicable to an Association of person as per paragraph A of part I of the first schedule of the finance act, 2019. This fact has been agreed by the learned CIT A also. However, the relief was not granted because assessee could not file reply for the reason that password and login ID of the assessee for disabled. Even otherwise, when the CIT appeal agrees with the contention that the tax should be charged at the normal slab rates, submission of the assessee should not have made any difference. We fully agree with the contention of the learned authorized representative that the income is required to be charged as per the normal slab rates as per the provisions of Section 168 (1) (b) of the act with respect to the first schedule of The Finance Act 2019. Accordingly, we direct the learned assessing officer to tax the income of the assessee as per normal slab rates and not at maximum marginal rate. Accordingly, ground number 1 and 2 of the appeal of the assessee are allowed.”
7.1 The Hon’ble Madhya Pradesh High Court in case of G.B.J Seth (supra) held that only for statistical purposes, the executors of the estate of the deceased are assessed as AOP; otherwise for the purpose of rates etc., the assessment has to be deemed to be on the assessee or the actual beneficiaries.
8. Respectfully following the above decisions, we direct the AO to tax the assessee as per normal slab rates and not at maximum marginal rates. Accordingly, the grounds are allowed.
9. In the result, the appeal of the assessee is allowed.
Order is pronounced on 30.03.2026.
