Vishnu Kumar Katuri Vs ITO (ITAT Hyderabad)
The ITAT Hyderabad allowed the assessee’s appeal against the order dated 25.10.2023 of the CIT(A)-NFAC concerning A.Y. 2011-12. The appeal challenged confirmation of an addition of Rs.95,10,000/- made by the Assessing Officer.
Information was received that the assessee had invested Rs.95,10,000/- in a savings bank account with Karur Vysya Bank Ltd., Adilabad. As the assessee was not assessed to Income Tax, proceedings were reopened under Section 148. Notice dated 26.03.2018 was served on 27.03.2018, followed by notices under Sections 143(2) and 142(1). As no return was filed and the assessee did not attend the hearings, the Assessing Officer completed the assessment under Section 144 read with Section 147, determining total income at Rs.95,10,000/-. The CIT(A)-NFAC upheld the assessment.
Before the Tribunal, the assessee’s counsel submitted that Shri Vishnu Kumar Katturi had died on 07.11.2017, before the notice under Section 148 was issued on 26.03.2018. It was also submitted that the father of the deceased had appeared before the Assessing Officer and explained that the deposits related to commission received by his deceased son from independent business activities, while stating that he was not the legal heir. The assessee’s counsel contended that reopening and the consequent assessment based on the father’s submissions were non-est in law.
The assessee relied on the Coordinate Bench decision in Shri Siva Janardhana Varma Muppala vs. Dy. CIT, order dated 31.03.2023. The Revenue relied upon the orders of the Assessing Officer and CIT(A)-NFAC.
The Tribunal held that in reassessment proceedings, a notice cannot be issued in the name of a deceased person and that reopening in the name of a deceased person is not maintainable in law. Since the appellate order was based on such reopening, it was held to be bad in law and unsustainable. The Tribunal also noted that the fact of death had been brought to the notice of both the Assessing Officer and CIT(A)-NFAC and was reflected in Form 35.
Following the Coordinate Bench decision, the Tribunal annulled the assessment made on the deceased assessee. It relied on the proposition that a notice under Section 148 issued to a dead person is a nullity and consequently the order under Sections 144/147 and the demand raised thereunder are liable to be quashed.
Accordingly, the assessment was annulled and the assessee’s appeal was allowed. The order was pronounced in the Open Court on 31 January 2024.
Cases Discussed
- Shri Siva Janardhana Varma Muppala vs. Dy. CIT (ITAT Hyderabad), ITA No.453/Hyd/2022, order dated 31.03.2023
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 25.10.2023 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2011-12.
2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) NFAC in confirming the addition of Rs.95,10,000/- made by the Assessing Officer on a diseased assessee.
3. Facts of the case, in brief, are that the assessee is an individual. In this case, information was received that the assessee had invested an amount of Rs.95,10,000/- in the Savings Bank Account No.1459115000001761 held with M/s. Karur Vysya Bank Ltd, Adilabad. Since the assessee is not assessed to Income Tax, the case of the assessee was reopened and accordingly notice u/s 148 dated 26.03.2018 was served on 27.03.2018. Subsequently, statutory notices u/s 143(2) and 142(1) were issued and served on the assessee requesting him to attend the office and furnish copy of the return along with the required information. However, the assessee neither filed any return of income nor attended the hearing despite several opportunities granted. Therefore, the Assessing Officer completed the assessment u/s 144 r.w.s. 147 of the I.T. Act determining the total income of the assessee at Rs.95,10,000/-.
4. In appeal, the learned CIT (A) NFAC upheld the order of the Assessing Officer.
5. Aggrieved with such order of the learned CIT (A) NFAC the assessee is in appeal before the Tribunal.
6. The learned Counsel for the assessee submitted that in the present case, as per the assessment order, notices u/s 148 of the I.T. Act was served on the assessee on 27.03.2018 and thereafter vide notices dated 19.7.2018 and 30.8.2018, the assessee was called upon to attend the hearing. The father of the assessee had appeared before the Assessing Officer and the contentions were recorded by the Assessing Officer in Para 3 of the assessment order as under:
“3. In response to the above final show cause letter, the assessee vide his reply dated 14.12.2018 filed in the Inward Section, stated that after his son’s demise he has received several notices u/s 148 & 142(1) of the Income Tax Act in the status of Legal heir/representative to explain the financial transactions entered by him. He has also stated that the said deposits pertain to the commission amount which has been received by his son Shri Vishnu Kumar Katturi while doing business independently in Agricultural Market Committee and the assessee is not his legal heir”.
7. It was submitted by the learned AR that the assessee namely Shri Vishnu Kumar Katturi had passed away on 7/11/2017 prior to the issuance of notice u/s 148 by the Assessing Officer and it was submitted that the notice u/s 148 was issued on 26.03.2018. It was submitted that the reopening of the assessment as well as the passing of the assessment order based on the submission of the father of the diseased assessee are non-est in the eyes of law. It was further submitted that the bank Account which was referred to in the assessment order belongs to the father of the diseased assessee and the amount deposited in the bank Account of the father of the diseased assessee were added to the income. It was submitted that feeling aggrieved by the order, the assessee (late Shri Vishnu Kumar Katturi through his father) had filed an appeal before the learned CIT (A) NFAC. Brief facts of the case in Para 11 of the Form 35 it is mentioned as under:
8. From the reading of the averments made in para 11 it is clear that the assessee has passed away on 7.11.2017 prior to the issue of notice u/s 148. It was submitted by the learned AR that the assessment is required to be quashed and for that purpose, he relied upon the decision of the Coordinate Bench of the Tribunal in ITA No.453/Hyd/2022 in the case of Shri Siva Janardhana Varma Muppala vs. Dy. CIT order dated 31.03.2023.
9. The learned DR, on the other hand, heavily relied on the order of the Assessing Officer and the learned CIT (A) NFAC.
10. We have heard the rival arguments made by both the sides and perused the orders of the AO and the learned CIT (A) NFAC. Though in a re-assessment proceeding, notice cannot be issued in the name of the diseased person and a reopening made in the name of a diseased person per se is not maintainable in the eyes of law. Therefore, the appellate order which was based on such a reopening is bad in law and is not sustainable. In the present case, the father of the diseased assessee Shri Katturi Ashok Kumar had brought this fact before the Assessing Officer as well as the learned CIT (A) NFAC. Further, this is also verifiable from the memo of the part in Form 35 which reflects the name of the diseased son Shri Vishnu Kumar Katturi.
11. In the light of the above, we annul the assessment which has been made on a deceased person. For the above proposition, we rely on the decision of the Coordinate Bench of the Tribunal in the case of Shri Siva Janardhana Varma Muppala vs. Dy. CIT (Supra) order dated 31.03.2023 wherein it was held as under:
12. In view of the above discussion, the notice issued u/s 148 on a dead person is a nullity. Consequently, the order passed u/s 144/147 of the I.T. Act and the demand so raised are quashed.
13. In the result, appeal filed by the assessee is allowed.
Order pronounced in the Open Court on 31st January, 2024.
