Case Law Details
Krishna Swamy Vs ITO (ITAT Hyderabad)
The Hyderabad ITAT quashed the entire assessment proceedings after holding that notices u/s 143(2) and 142(1), as well as the final assessment order u/s 143(3), were issued in the name of a deceased assessee despite the department being fully aware of the death. The Tribunal held that once the return itself was filed by the legal heir, the department could not continue proceedings against a non-existent person.
Rejecting the Revenue’s argument that the AO had mentioned the death of the assessee in the body of the assessment order, the ITAT observed that a mere reference to the death cannot cure the inherent jurisdictional defect which had crept into the proceedings from inception itself.
The Tribunal reiterated that once the department is informed about the death of an assessee, proceedings must thereafter continue strictly in accordance with section 159 against the legal representative. Since all statutory notices and the assessment order continued in the name of the deceased person and his PAN, the proceedings were held void ab initio.
The ITAT further held that participation by the legal heir in assessment proceedings does not cure a foundational jurisdictional defect. Relying on Savita Kapila, Vipin Walia, Alamelu Veerappan and the Supreme Court ruling in Maruti Suzuki India Ltd., the Bench observed that jurisdiction must be assumed strictly in the manner known to law and defects going to the root of jurisdiction are not curable u/s 292B.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeal filed by the assessee is directed against the order passed by the Additional/Joint Commissioner of Income Tax (Appeals)-4, Chennai, (for short, “CIT(A)”), dated 10/10/2025 which in turn arises from the order passed by the AO under section 143(3) of the Income Tax Act, 1961 (for short, “Act”) dated 28/11/2019 for AY 2017-18. The assessee (through L/heir) has assailed the impugned order passed by the Addl/JCIT(A)-4, Chennai, on the following grounds of appeal before us:
“1. That on facts and circumstances of the case and in law, the Order under Section 143 of the Income-tax Act, 1961 (Act) as well as the Order under Section 250 of the Act is bad in law and in facts and circumstances of the case;
2. That on the facts and circumstances of the case and in law, the Ld. AO has erred in carrying out an addition under Section 69A of the Act on account of unexplained money amounting to INR 13,19,107 and the NFAC/CIT(A) have erred in enhancing the said addition on account of unexplained money under Section 69A of the Act to INR 26,38,214;
3. That on the facts and circumstances of the case, the NFAC/CIT(A) have erred enhancing the addition on account of unexplained money under Section 69A of the Act from INR 13,19,107 to INR 26,38,214 without issuing a Show cause notice under Section 251(2) of the Act
4. That on the facts and circumstances of the case, the Ld.AO/ NFAC/CIT(A) erred in levying interest under Section 234A of the Act Additional Ground being taken for the first time
5. That on facts and circumstances of the case and in law, the Notice(s) as well as the Order under Section 143 of the Income-tax Act, 1961 (Act) as well as the Order under Section 250 of the Act is bad in law and in facts and circumstances of the case as the Notices(s) and Assessment Order as well as the Order of the NFAC/CIT(A) have been issued in the name of the dead person/Appellant despite the return being filed by the Legal heir and the intimation of the death by the Legal Heir;
6. The Appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal. Each of the Grounds are without prejudice to each other.”
2. Succinctly stated, the assessee, viz. Late Shri Krishna Swamy expired on 27.02.2017. Thereafter, the return of income for the assessment year 2017-18 was filed on 23.03.2018 by his legal representative, Shri IKE Swamy, declaring a total income of Rs. 13,33,510/-. Thereafter, the assessee’s case was selected for “limited scrutiny” under CASS for verification of cash deposits made during the demonetization period. Notices under sections 143(2) and 142(1) of the Act were issued in the name of the deceased assessee. In response to the said notices, the legal heir of the assessee, viz., Shri IKE Swamy, participated in the proceedings and furnished details as were called for by the AO.
3. During the course of assessment proceedings, the AO noticed cash deposits made during the demonetization period aggregating to Rs. 26,38,214/- in the bank accounts of the assessee maintained with Canara Bank and Andhra Bank. On being questioned, the assessee’s legal heir explained that the said deposits were sourced from earlier cash withdrawals from disclosed bank accounts and from rental receipts. The AO, however, accepted the explanation only partly and treated a sum of Rs. 13,19,107/- as unexplained money under section 69A of the Act, and framed the assessment in the name and PAN of the deceased assessee (PAN: AGQPS2170R).
4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A) but without success. The CIT(A), while dismissing the appeal, enhanced the addition made under section 69A of the Act from Rs. 13,19,107/- to Rs. 26,38,214/-.
5. The assessee (through L/heir), aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
6. Shri Abhiroop Bhargav, CA, the learned Authorized Representative (for short, “Ld. AR”) submitted that the entire assessment proceedings are void ab initio as the notices issued under sections 143(2) and 142(1) of the Act, as well as the assessment order passed under section 143(3), were issued and passed in the name of a dead person despite the department being fully aware of the death of the assessee. It was submitted that the return was filed by the legal heir and that the department therefore had complete knowledge of the assessee’s death.
7. Per contra, Shri T. Sunil Gowtham, the learned Senior Departmental Representative (for short, “Ld. Sr-DR”) submitted that the AO was conscious of the fact that the assessee had expired and had specifically referred to the same in the body of the assessment order. It was thus contended that merely because the caption of the assessment order continued to mention the name of the deceased assessee, it cannot be said that the assessment suffers from any jurisdictional defect. It was further submitted that the legal heir had actively participated in the proceedings and, therefore, the assessment cannot be held invalid on technical grounds.
8. We have heard the rival submissions and perused the material available on record. The undisputed facts borne out from the record are that the assessee expired on 27.02.2017 and the return of income for the impugned assessment year was filed thereafter by the legal heir. Thus, the department was fully aware of the assessee’s death. Despite such knowledge, notices under sections 143(2) and 142(1) of the Act were issued in the name of the deceased assessee, and the assessment order under section 143(3) was also passed in the name of the deceased assessee using his PAN.
9. We have thoughtfully considered the contentions of the Ld. Senior DR that the AO had referred in the body of the assessment order to the factum of the death of the assessee, and therefore, the assessment cannot be regarded as invalid. However, in our considered opinion, mere reference in the body of the assessment order to the death of the assessee would not cure the inherent jurisdictional defect that had crept into the proceedings from the very inception.
10.Once the department had knowledge regarding the death of the assessee, the proceedings thereafter ought to have been initiated and continued strictly in accordance with section 159 of the Act against the legal representative of the deceased assessee. Admittedly, the statutory notices under sections 143(2) and 142(1) were not issued in the name of the legal heir but were issued in the name of the deceased assessee. The assessment order was also ultimately framed in the name of the deceased person.
11. The issue as to whether or not the assessment proceedings initiated and completed in the name of a deceased person are valid is squarely covered by the judgment of the Hon’ble High Court of Delhi in the case of Savita Kapila (Legal heir of Late Shri Mohiner Paul Kapila) Vs. ACIT (2020) 426 ITR 502 (Delhi), wherein it has been held that issuance of notice against a dead person and consequent assessment proceedings is null in law, and such a defect is not curable under section 292B of the Act. The Hon’ble High Court categorically held that once the department is informed about the death of the assessee, proceedings can thereafter be initiated only against the legal representatives in terms of section 159 of the Act.
12. We further find that a similar view has been taken by the Hon’ble High Court of Delhi in Vipin Walia v. ITO, WP (C) No. 8273/2015, dated 15/02/206, and by the Hon’ble High Court of Madras in Alamelu Veerappan v. ITO, WP Nos. 30060 & 32631/2017, dated 07/06/2018. The Hon’ble Supreme Court in CIT vs. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (SC) has also held that a defect which goes to the root of jurisdiction cannot be cured by participation or acquiescence.
13. As in the present case, the jurisdiction itself was assumed against a non-existent person; therefore, the defect is not merely procedural or clerical. In our view, merely because the AO was subjectively aware of the death of the assessee or had made a passing reference thereto in the body of the assessment order would not validate the proceedings otherwise initiated and concluded against a dead person.
14. Apropos the contention of the Revenue that participation by the legal heir cures the defect, we are unable to concur with the same in the backdrop of the settled legal position discussed hereinabove. We are of firm conviction that jurisdiction must be assumed in the manner known to law, and any defect going to the root of such assumption of jurisdiction is fatal to the proceedings.
15. We, thus, respectfully follow the judicial precedents referred to hereinabove, and hold that the assessment framed under section 143(3) in the name of the deceased assessee is invalid, void ab initio, and liable to be quashed.
16. As we have quashed the assessment itself on the ground of illegal assumption of jurisdiction, the other grounds raised on merits, including the addition under section 69A and enhancement made by the CIT(A), are rendered academic and are left open.
17. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on this 15thday of May, 2026
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