DWARAMPUDI KRSS SUBBIREDDY L/R OF DWARAMPUDI RAMAKRISHNA REDDY,EAST GODAVARI DIST V. INCOME TAX OFFICER, WARD-2, KAKINADA

ITA 219/VIZ/2025

AI Insights

The case involves an appeal by the legal representative of the late Dwarampudi Ramakrishna Reddy against the orders of the A.O. and the CIT(A), which were passed in the name of the deceased. The A.O. had made additions to the income of the deceased for unexplained cash deposits during the demonetization period, which were contested in the appeal. The Tribunal noted that the assessments and subsequent orders were improperly made in the name of a deceased person, which is against the legal provisions that require such proceedings to be continued against the legal representative from the stage at which it stood on the date of death. The Tribunal cited Section 159 of the Income Tax Act, 1961, and a relevant judgment from the Madhya Pradesh High Court to support its decision to remand the case for a proper assessment in the name of the legal representative.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 707095 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 11-04-2025
• Other Referred Cases: Commissioner of Income Tax Vs. Dalumal Shyamumal (2005) 276 ITR 62 (MP)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Source of fund
• Section: 144; 142(1)

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, I.T.A. No.219/Viz/2025 (निर्धारण वर्ा/ Assessment Year : 2017-18) Sri Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, G. Mamidada, East Godavari District. PAN : BSNPD4442B. Vs. The Income Tax Officer, Ward – 2, Kakinada. (अपीलधर्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri GVN Hari, Advocate राजस्व का प्रतततितित्व/ Department Represented by : Dr. Aparna Villuri, Sr. DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 03.07.2025 घोषणा की तारीख/ Date of Pronouncement : 07.07.2025 O R D E R प्रतत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee is directed against the order passed by the Addl/JCIT(A)-2, Chandigarh, dated 30.12.2024, which in turn arises from the order passed by the Assessing Officer 2 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, (for short “A.O.”) under Section 144 of the Income Tax Act, 1961 (for short “the Act”) dated 21.12.2019 for A.Y. 2017-18. The impugned order has been assailed on the following grounds of appeal before us: “1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in dismissing the appeal ex-parte. 3. The learned Commissioner of Income Tax (Appeals) ought to have directed the assessing officer to delete the addition of Rs.9,01,380 made u/s 69A of the Act towards unexplained cash deposits during demonetization period. 4. Any other ground that may be urged at the time of appeal hearing.” 2. Succinctly stated, the A.O., based on information that the assessee during the demonetization period had made cash deposits of Rs. 28.50 lacs in his bank account no.62178010899 with State Bank of India, Branch: Gollalamamidada, but had not filed his return of income for the subject year, issued a notice under Section 142(1) of the Act, calling upon him to furnish his return of income. 3. In reply, Smt. Dwarampudi Bullamma, widow of late Shri Dwarampudi Ramakrishna Reddy (the assessee), informed the A.O. that the assessee had expired on 13.06.2018. Thereafter, Smt. Dwarampudi Bullamma sought some further time to place on record the requisite information, stating that she was the legal heir of the deceased assessee. In the meantime, the A.O. called for the bank 3 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, statements of the assessee for the subject year from the State Bank of India, which revealed that the assessee had during the demonetization period, i.e., from 14.11.2016 to 02.11.2016 made cash deposits of Rs. 28.50 lacs. Apart from that, the A.O. observed that the assessee had during the pre-demonetization period made cash deposits of Rs. 10 lacs in his aforementioned bank account. Thereafter, the A.O., vide his notice issued u/s 142(1) of the Act, called upon Smt. Dwarampudi Bullamma (supra) to furnish information regarding the source of the cash deposits made by the assessee (since deceased) in his bank account. In reply, it was submitted by Smt. Dwarampudi Bullamma (supra) that the assessee, during his lifetime, had carried out agricultural activities on agricultural land both owned by him as well as those taken on lease. Although it was submitted before the A.O. that the assessee had made the cash deposits from his multi-facet sources of income, viz., (i). agriculture income: Rs.6,84,820/-; (ii) rental income: Rs. 2,10,000/-; and (iii) other income: Rs. 4,56,309/- but the said explanation did not find favour with the A.O. Accordingly, the A.O. determined the income vide his order passed u/s 144 of the Act, dated 21.12.2019 at Rs. 15,04,580/-. 4 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, 4. Aggrieved, an appeal was filed against the order passed by the A.O. u/s 144 of the Act, dated 21.12.2019, but without success. As the appellate proceedings had gone unattended, therefore, the CIT(A) found no infirmity in the view taken by the A.O. and upheld the addition made by him. 5. Aggrieved with the order passed by the CIT(A), viz. Shri Dwarampudi KRSS Subbi Reddy, the legal representative of Smt. Dwarampudi Bullamma (supra) i.e. the assessee’s legal representative, who too in the meantime had expired, has carried the matter in appeal before us. 6. Shri GVN Hari, Advocate, the learned Authorized Representative (for short “Ld.AR”) of the assessee, at the threshold of hearing of the appeal, submitted that the present appeal involves a delay of 42 days. Elaborating on the reasons leading to the delay, the Ld. AR took us to the application filed by the assessee seeking condonation of the same along with a supporting affidavit. The Ld. AR submitted that as the assessee had expired during the course of the assessment proceedings on 13.06.2018, therefore, the matter was thereafter being pursued by his widow, Smt. Dwarampudi Bullamma Reddy. The Ld. AR submitted that though Smt. 5 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, Dwarampudi Bullamma Reddy (supra) in her capacity as a legal representative of the assessee (since deceased), pursued the matter, but thereafter she suffered from health problems and expired on 05.06.2024. The Ld. AR submitted that as the other family members were unaware about the filing of the appeal and the ongoing proceedings before the CIT(A), thus, the same had resulted in the dismissal of the said appeal vide an ex parte order. It was further stated by the assessee that it was only when Shri Dwarampudi K.R.S.S. Subbi Reddy, legal representative of Shri Dwarampudi Ramakrishna Reddy, had received a call from the Income Tax Department regarding the recovery of the outstanding demand raised in the case of his father, i.e., the assessee (since deceased) that he had learned about the dismissal of the appeal by the CIT(A). The Ld. AR submitted that Shri Dwarampudi K.R.S.S. Subbi Reddy (supra), involving no further delay, took the necessary steps for filing of the present appeal before the Tribunal and filed the same on 11.04.2025, which by that time involved a delay of 42 days. The Ld. AR submitted that as the delay in filing the appeal had crept in due to unforeseen and unfortunate circumstances, coupled with bona fide reasons, therefore, the same may, in all fairness, be condoned. 6 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, 7. Per contra, Dr. Aparna Villuri, the Learned Senior Departmental Representative (for short “Ld. DR”) candidly submitted that she has no objection if the delay involved in filing the appeal is condoned. 8. Considering the facts leading to the delay in filing the present appeal, we have no hesitation in condoning the same. 9. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record. 10. Admittedly, it is a matter of fact borne from the record that Shri Dwarampudi Rama Krishna Reddy (assessee) had expired on 13.06.2018, i.e., in the course of the assessment proceedings, which had culminated vide order of assessment passed by the A.O. under Section 144 of the Act, dated 21.12.2019. However, we find that, despite that Smt. Dwarampudi Bullamma (supra), widow of the assessee, had in response to the notice received from the A.O. u/s 142(1)(ii) of the Act, dated 29.08.2019, brought it to his notice, vide her letter dated 20.09.2019 that the assessee had expired, but he despite that had framed the assessment in the name of the assessee (since deceased). Also, we find that the CIT(A) had thereafter, 7 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, disposed of the appeal vide order passed under Section 250 of the Act, dated.30.12.2024 in the name of the deceased assessee. 11. Before proceeding any further, we find that the primary issue which requires to be addressed is as to whether or not the assessment framed by the A.O. u/s 144 of the Act, dated 21.12.2019, in the name of the assessee (since deceased) i.e., subsequent to his death on 13.06.2018 can be sustained in the eyes of law ? 12. As per the settled principle of law, no order can be passed against a dead person and, any proceedings regarding the deceased assessee shall be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. Our aforesaid view is supported by section 159, which reads as under: “159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section-147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),— (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and 8 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, (c) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with. (5) The provisions of sub-section (2) of section-161, section- 162 and section-167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative. (6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability.” 13. In a case where an assessee dies pending any proceedings before the department, the provisions of Section 159 of the Act gets attracted. Accordingly, it is incumbent on the department to ensure compliance with Section 159 before any order is passed. An analogy can be drawn from the judgment of the Hon’ble High Court of Madhya Pradesh in the case of Commissioner of Income Tax Vs. Dalumal Shyamumal (2005) 276 ITR 62 (MP). The Hon’ble High Court had observed that as the A.O. had framed the assessment in the name of the assessee (since deceased), therefore, the assessment so framed was a nullity. However, the Hon’ble High Court was of the view that once the assessment order was held to be a nullity, then 9 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, the Tribunal should have given a consequential direction as contemplated u/s. 159 of the Act to the A.O. so that a proper assessment order could be passed. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under: “In our opinion, the Tribunal while deciding the appeal ought to have taken note of section 159 ibid and should have accordingly, remanded the case to assessing officer for ensuring compliance of section 159 for passing appropriate orders of assessment after due notice to legal representative of deceased assessee. Indeed, once the assessment order is held to be a nullity then in such event consequential direction as contemplated under section 159 of the Act should have been given to assessing officer so that proper assessment order could be passed.” 14. Based on our aforesaid observations and the judgment of the Hon’ble High Court of Madhya Pradesh in the case of Commissioner of Income Tax Vs. Dalumal Shyamumal (supra), we are of the view that as both the A.O. and the Addl/JCIT(A)-2, Chandigarh had passed their respective orders dated 21.12.2019 and 30.12.2024 in the name of the deceased assessee who had expired on 13.06.2018, therefore, the order so passed by them suffers from a fundamental defect and cannot be sustained. We, thus, hold the order passed by the Addl/JCIT(A)-2, Chandigarh, dated 30.12.2024 as nullity and remand the matter to the file of A.O. with a direction to frame the assessment afresh after impleading the legal heirs of the deceased assessee on record. Needless to say, the A.O. shall afford a 10 ITA No.219/Viz/2025 Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, reasonable opportunity of being heard to the legal heirs of the assessee (since deceased) in the course of de-novo proceedings. 15. In the result, the appeal is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 7th July, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखध सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यधनिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 07.07.2025. *TYNM/sps आदेशकी प्रतततिति अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/The Assessee : Sri Dwarampudi K R S S Subbireddy, L/R of Dwarampudi Ramakrishna Reddy, D.No.10-37, Block – 8, Pedapudi, G. Mamidada, East Godavari District 2. राजस्व/ The Revenue : The Income Tax Officer, Ward – 2, Kakinada. 3. The Principal Commissioner of Income Tax, Visakhapatnam. 4. तवभागीयप्रतततितर्, आयकर अिीिीय अतर्करण, / DR, ITAT, Visakhapatnam. 5. गार्ाफ़ाईि / Guard file आदेशािुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "