Case Law Details
ITO Vs Sarika Shankarrao Zilpe (ITAT Nagpur)
The Revenue filed an appeal before the Income Tax Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals)/NFAC dated 24.01.2025 for Assessment Year 2018-19. The appeal arose from an assessment order passed under Sections 147, 144, and 144B of the Income Tax Act. The Tribunal first condoned a delay of four days in filing the appeal and admitted the matter for hearing.
The Revenue raised several grounds challenging the order of the CIT(A). Its primary grievance was that the CIT(A) entertained an appeal filed by a person who was not registered as a legal heir on the e-filing portal and therefore was allegedly unauthorized. The Revenue also argued that the CIT(A) admitted additional evidence without complying with Rule 46A of the Income Tax Rules and without obtaining a remand report from the Assessing Officer (AO). It further contended that substantial business transactions and cash deposits continued in the assessee’s name during AY 2018-19, including liquor sales receipts of Rs. 31,33,361 and cash deposits of Rs. 1,39,86,671, indicating that income continued to be earned in the assessee’s name.
The facts of the case showed that the assessee had not filed a return of income for AY 2018-19. Based on information available with the Jurisdictional Assessing Officer, it was found that substantial cash deposits had been made in the bank account. During proceedings under Section 148A(d), a notice under Section 148 was issued and served upon the assessee, but no return of income was filed. Information received from Yeotmal Urban Co-op Bank Ltd. through Form 61A showed aggregate cash deposits of Rs. 1,39,86,671 in the name of M/s Hotel Kingstar Restaurant. The AO completed the assessment under Sections 147 and 144 by treating the total credits in the bank account as unexplained cash credit under Section 69. An additional amount of Rs. 31,33,361 reflected in Form 26AS was also added under Section 69C.
Aggrieved by the assessment order, the assessee’s legal heir filed an appeal before the CIT(A). The legal heir submitted that the assessee had died on 23.04.2015 and that the death certificate had been communicated to the AO on 18.04.2022. Despite this information, the AO completed the assessment in the name of the deceased person. It was further submitted that the AO failed to verify that the cash deposits in the Yavatmal Urban Co-op Bank account belonged to M/s Hotel Kingstar Restaurant and not to the assessee personally. The legal heir also argued that no independent enquiry had been conducted regarding the death of the assessee before making the additions.
After considering the submissions, the CIT(A) held that issuance of a notice under Section 148 to a deceased person is invalid and non est in law. The CIT(A) observed that the reassessment proceedings could not continue against the legal representative without issuing proper notices under Section 159 of the Act. It was noted that the department had already been informed of the assessee’s death on 18.04.2022 and that there had been correspondence between the Jurisdictional AO and the Assessing Officer during the assessment proceedings. Despite this, the AO proceeded with reassessment in the name of the deceased person and passed an ex parte order. The CIT(A) concluded that the notice issued under Section 148 and the proceedings initiated under Section 147 were void ab initio. Consequently, the assessment order was quashed and the additions of Rs. 1,39,86,671 and Rs. 31,33,361 were deleted.
Before the Tribunal, the Departmental Representative supported the assessment order and argued that reassessment proceedings were validly initiated on the basis of credible information received through Form 61A and Form 26AS. It was argued that the assessee failed to comply with statutory notices and therefore the AO was justified in completing the assessment under Sections 144 and 147. The Departmental Representative also contended that technical defects should not invalidate proceedings when there was substantial evidence of undisclosed income. According to the Revenue, participation by the legal heir before the CIT(A) cured the defect, and therefore the order quashing the assessment should be reversed.
The assessee’s representative supported the order of the CIT(A) and argued that the reassessment proceedings were void ab initio because the notice under Section 148 was issued in the name of a deceased person who had died much before initiation of proceedings. It was emphasized that the department had already been informed about the death along with supporting documents. The representative argued that proceedings initiated against a deceased person are null and void and such a jurisdictional defect cannot be cured under Section 292B of the Act. It was also submitted that the bank account belonged to M/s Hotel Kingstar Restaurant and no proper enquiry had been conducted before making additions.
The Tribunal examined the record and observed that the assessee had died on 23.04.2015, long before initiation of reassessment proceedings. The notice under Section 148 and the consequential assessment order were both issued in the name of the deceased person. The Tribunal noted that the department had been informed of the death on 18.04.2022 along with supporting evidence, yet the AO failed to issue notice to the legal representative in accordance with Section 159. The Tribunal held that proceedings initiated against a deceased person are void ab initio and non est in law, and such a defect cannot be cured under Section 292B. It upheld the findings of the CIT(A), found no infirmity in the order quashing the reassessment, and dismissed the Revenue’s appeal.
FULL TEXT OF THE ORDER OF ITAT NAGPUR
This appeal by the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi (for short, “CIT(A)”), dated 24/01/2025 passed under section 250 of the Income Tax Act, 1961 (for short, “Act”) which is emanating from assessment order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Act dated 22.03.2023 for the Assessment Year 2018-19.
2. Registry has pointed out that there is a delay of 04 days in filing the present appeal. Considering the minimal nature of the delay and the circumstances explained, the delay is condoned and the appeal is admitted for hearing.
3. Revenue has raised the following grounds of appeal:
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating the appeal without examining whether the appeal filed was valid as per law it was filed by a person not registered on the efiling portal as legal heir and hence an unauthorized authority?
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in taking cognizance of documents filed by a person other than the assessee and so not authorized as not registered as legal heir on the efiling portal?
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that despite the assessee expiring on 13/05/2015 as claimed during appeal, during AY 2018-19 business transactions in respect of liquor sales continue to be done in her name in respect of Rs. 3 1,33,361/- and cash deposits amounting to Rs. 1,39,86,671 were done in her account and as such income continued to be earned in her name which was taxable?
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating the appeal based on the documents furnished before it in contravention of Rule 46A (3) of the Income Tax Rule 1962 by not seeking views from the Assessing Officer on the additional evidence furnished during appellate proceedings?
5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating appeal based on documents filed for the first time during the appellate proceedings without recording reasons for admission of the same in violation the provision of Rule 46A (2) of the Income Tax Rule, 1962?
6. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in taking cognizance of and adjudicating on documents filed by a person not registered as legal heir on e-filing portal and hence not authorized and in not considering the contents of the assessment order wherein the details of notices issued to the assessee and non- compliance are available?
7. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not taking into account the fact that no documents were filed before the FAO during the assessment proceedings by the person conducting the business in her name or by the person filing the appeal?
8. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in failing to appreciate the fact that the appellant does not come with clean hands as he has taken cognizance of the assessment order but not the various notices issued by the FAO as the same response filed during the appellate proceedings could have been given during assessment proceedings?
9. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not calling for remand report from the Assessing Officer on the additional evidence filed during appellate proceedings and adjudicated on the same without taking the AO’s views on these documents?
10. The appellant craves leave to add, amend, vary and/or alter any of the above grounds, as and when deemed necessary.”
4. On perusal of the above grounds, the Department’s main grievance is that Ld. CIT(A) entertained an invalid appeal filed by an unauthorized person (not a registered legal heir) and decided the case by admitting additional evidence in violation of Rule 46A, without obtaining a remand report from the Ld. Assessing Officer (AO).
5. Facts of the case in brief are that assessee did not choose to file return of income for A.Y. 2018-19. Based on the information available with the then Ld. Jurisdictional Assessing Officer (JAO), assessee made huge cash deposits in the bank account. In 148A(d) proceedings, a notice u/s. 148 was issued and served upon the assessee, but assessee did not file any return of income. On the information provided by the bank i.e. Yeotmal Urban Co-op Bank Ltd. in Form No. 61A, certified that assessee has made aggregate cash deposits of Rs.1,39,86,671/- in the name of the business being mentioned as M/s.Hotel Kingstar Restaurant. Therefore, Ld.AO completed the assessment u/s. 147 r.w.s. 144 of the Act considering the total credits made in the bank account as unexplained cash credit and the entire amount of Rs. 1,39,86,671/- is added back to the total income of the assessee u/s. 69 of the Act. In addition to this, Ld. AO considering the details available in Form 26AS, an amount of Rs. 3 1,33,361/- is also added back to the total income of the assessee u/s. 69C of the Act.
6. Aggrieved with the order of Ld. AO, assessee preferred appeal before the Ld. CIT(A). Before the Ld. CIT(A), Legal Heir of the assessee submitted that assessee died long back on 23.04.2015 and the death certificate of the assessee communicat1ed the Ld. AO on 18.04.2022. Even though in spite of submission of death certificate, Ld. AO completed the assessment in the name of a deceased person. The total addition of Rs. 1,71,20,032 has been made by the Ld. AO and raised a demand of Rs. 2,84,44,205/- in the hands of the deceased assessee. Before making the addition, Ld. AO failed to enquire abut the fact that cash deposited in Yavatmal Urban Co-op Bank does not belong to the assessee, but belong to M/s. Hotel Kingstar Restaurant. Prior to making addition, no independent enquiry is carried out abut the death of assessee long back. The Ld. CIT(A) after considering the explanation of the LR of the assessee, allowed the appeal and deleted the addition holding as under:-
“7.13 It is now a settled position of law a notice u/s 148 of the Act issued to a deceased person is invalid and non est in the eyes of law. In this case, notice u/s 148 of the Act was issued against the deceased assessee. Since this is not a case falling under clause (a) of Section 159(2) of the Act, the proceedings pursuant to the notice issued u/s 148 of the Act could not be continued against the legal representative. Thus, the Assessing Officer was required to issue valid notices to the legal representative of the appellant. However, the Assessing Officer continued with the proceedings pursuant to the impugned notice which was issued in the name of a deceased person and passed an ex parte order in the name of the appellant.
7.14 Having been intimated about the appellant’s death on 18/04/2022, the JAO was required to inform the Assessing Officer about this crucial fact of the case. As stated in Para 6 of the impugned assessment order itself, there was correspondence between the JAO and the Assessing Officer during the course of assessment proceedings. The assessment order in this case was required to be passed in the name of the legal representative of the appellant after issue of appropriate notices.
7.15 In view of the facts and circumstances of the case, the impugned notice u/s 148 of the Act is void ab initio and the proceedings u/s 147 of the Act initiated against the appellant who was already deceased at the time of such initiation are null and void. Accordingly, the impugned assessment order is bad in law and in facts; and is, therefore, quashed. In the result, the impugned additions of Rs. 1,39,86,671/- and Rs.31,33,361/- are deleted.”
7. Aggrieved by the order of Ld. CIT(A), Revenue is in appeal before this Tribunal. Ld. DR submitted that vehemently supported the assessment order passed by the Ld. AO. It was submitted that assessee had failed to file the return of income despite having made substantial cash deposits in the bank account. Based on credible information received through Form No. 61A and Form 26AS, the Ld. AO rightly initiated proceedings u/s 147 of the Act. He further contended that assessee did not comply with the statutory notices issued during the reassessment proceedings, leaving the Ld. AO with no option but to complete the assessment u/s 144 r.w.s. 147 of the Act. It was further argued that the additions made u/s 69 and 69C of the Act were based on cogent material available on record. With regard to the issue of the assessee being deceased, Ld. DR submitted that mere technical defects should not invalidate the assessment proceedings when substantial evidence exists indicating undisclosed income. It was argued that the legal heir had participated before the Ld. CIT(A), and therefore, the defect, if any, stands cured. The Ld. DR thus prayed that the order of the Ld. CIT(A) quashing the assessment be set aside and that of the Ld. AO be restored.
8. Per contra, Ld. AR strongly supported the order of Ld. CIT(A). It was submitted that the entire reassessment proceedings are void ab initio as the notice u/s 148 of the Act was issued in the name of a deceased person, who had expired on 23.04.2015, much prior to initiation of 147 proceedings. The Ld. AR submitted that the fact of death of the assessee was duly intimated to the department on 18.04.2022 along with the death certificate. Despite having knowledge of this crucial fact, Ld. AO failed to issue notice to the legal heir and proceeded to complete the assessment in the name of the deceased person, which is impermissible in law. It was further argued that as per settled legal position, proceedings initiated against a dead person are null and void and cannot be cured by invoking provisions of section 292B of the Act. The Ld. AR relied upon various judicial precedents to submit that such defect goes to the root of jurisdiction. On merits also, the Ld. AR submitted that the bank account in question belonged to M/s. Hotel Kingstar Restaurant and not to the assessee in his individual capacity, and no proper enquiry was conducted by the Ld. AO before making the additions. Accordingly, the Ld. AR prayed that the order passed by the Ld. CIT(A), being legally sound and well-reasoned, be upheld.
9. We have heard the rival submissions and perused the material available on record. Learned counsel submitted a paper book running into 54 pages and also placed acknowledgment for communication of death certificate of the assessee to the Ld. AO on 18.04.2022. It is undisputed fact emerging from the record is that assessee had expired on 23.04.2015, i.e., much prior to the initiation of reassessment proceedings. The notice u/s 148 of the Act was issued in the name of the deceased person and the assessment was also completed in the name of the deceased assessee. We further observe that the fact of death of the assessee was duly brought to the notice of the Department on 18.04.2022 along with supporting evidence. Despite being aware of this crucial fact, Ld. AO failed to take corrective measures by issuing notice to the legal representative in accordance with law and instead proceeded to complete the assessment in the name of the deceased person. It is a settled position of law that any proceedings initiated against a deceased person are void ab initio and are non est in the eyes of law. Such a fundamental defect goes to the root of jurisdiction and cannot be cured by invoking the provisions of section 292B of the Act. The proper course available to the Ld. AO was to initiate proceedings, if permissible under law, in the name of the legal representative as per the provisions of section 159 of the Act. In the present case, Ld. CIT(A), after appreciating the facts and legal position, has rightly held that the notice issued u/s 148 and the consequential assessment order passed u/s 147 r.w.s. 144 of the Act are invalid in the eyes of law and accordingly quashed the same. We do not find any infirmity in the well-reasoned order of the Ld. CIT(A). The same view has been taken by us in the case of Late Jankidevi Nandlal Jaiswal through LR Amit Mohanlal Jaiswal. vs. ITO in ITA No. 238/NAG/2024, dated 27.03.2026. There is no scope to interfere in the cogent findings of Ld. CIT(A). Since the assessment order is non est, it is not necessary to delve upon the facts in detail.
10. In the result, appeal filed by the Revenue is dismissed.
Order pronounced on 11.05.2026 under Rule 34 of Income Tax (Appellate Tribunal) rules 1963
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