Tribunal Confirms Penalty on Deceased Invalid; Revenue Appeal Dismissed; Loan Attributed to HUF, Not Individual.

The Tribunal upheld the CIT(A)'s decision, declaring the penalty imposed under Section 271E on the deceased person as null and void. The Revenue's appeal was dismissed, confirming that the loan transactions were attributed to the HUF, not the individual. Notices issued to deceased persons were deemed void ab initio and not curable under Section 292B.

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Issues Involved:
1. Deletion of penalty levied under Section 271E of the Income Tax Act.
2. Issuance of notice in the name of a deceased person.
3. Applicability of Section 292B to cure defects in notices issued to deceased persons.
4. Attribution of loan transactions to the individual or HUF (Hindu Undivided Family).

Detailed Analysis:

Issue 1: Deletion of penalty levied under Section 271E of the Income Tax Act
The Revenue appealed against the deletion of a penalty of Rs. 1,00,00,000/- levied under Section 271E for contravention of Section 269T. The penalty was imposed because the assessee allegedly repaid a cash loan of Rs. 1 crore. The JCIT issued a show cause notice, and despite the assessee's reply denying the existence of the loan, the penalty was imposed. The CIT(A) deleted the penalty, noting that the loan was attributed to the HUF and not the individual, and the HUF had disclosed the transaction under the IDS-2016.

Issue 2: Issuance of notice in the name of a deceased person
The assessment was completed in the name of the legal heirs of the deceased assessee. However, the penalty notice was issued in the name of the deceased on 05/03/2018, despite the assessee's death on 30/01/2017. The CIT(A) held that such notices are void ab initio and cannot be cured under Section 292B, referencing decisions from the Hon'ble Bombay High Court and other jurisdictions.

Issue 3: Applicability of Section 292B to cure defects in notices issued to deceased persons
The CIT(A) and the Tribunal held that notices issued in the name of a deceased person are not curable under Section 292B. This was supported by case laws, including Sumit Balkrishna Gupta Vs ACIT, Vikram Singh Vs Union of India, and Rajendra Kumar Sehgal Vs ITO.

Issue 4: Attribution of loan transactions to the individual or HUF
The CIT(A) found that the loan transactions pertained to the HUF of the assessee and not to the individual. The HUF had disclosed Rs. 2 crores under IDS-2016 and was taxed for the remaining amount. Therefore, no penalty could be levied on the individual assessee for the repayment of the loan.

Conclusion:
The Tribunal upheld the CIT(A)'s decision, affirming that the penalty levied on the deceased person was null and void. The appeal by the Revenue was dismissed, confirming that the loan transactions were correctly attributed to the HUF and that notices issued to deceased persons cannot be cured under Section 292B. The order was pronounced in the open court on 30th January 2023.

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