Penalty Proceedings Not Initiable Against Deceased's Legal Representatives, Tribunal Rules in Favor of Assessee. The Tribunal held that penalty proceedings under sec. 271(1)(c) of the Income Tax Act, 1961, cannot be initiated against an assessee's legal ...
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Penalty Proceedings Not Initiable Against Deceased's Legal Representatives, Tribunal Rules in Favor of Assessee.
The Tribunal held that penalty proceedings under sec. 271(1)(c) of the Income Tax Act, 1961, cannot be initiated against an assessee's legal representatives after the assessee's demise. The Tribunal rejected the Revenue's argument that legal representatives are liable for such penalties under sec. 159 of the Act. Citing precedent, the Tribunal ruled in favor of the assessee, setting aside the penalty amount of Rs. 24,07,354/-. Consequently, the appeal was allowed, and all other arguments were deemed academic. The decision was announced on 03.11.2023.
Issues involved: The correctness of penalty proceedings u/s 271(1)(c) initiated after the assessee's demise.
Summary:
Issue 1: Correctness of penalty proceedings u/s 271(1)(c) initiated after the assessee's demise
The appeal for assessment year 2005-2006 was against the National Faceless Appeal Centre's order involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961. The primary issue in the case was the initiation of penalty proceedings after the assessee's demise. The assessee had passed away before various assessments and orders were made, leading to the question of the liability of the legal representatives for the penalty. The Revenue contended that the penalty proceedings were similar to an assessment, making the legal representatives liable under sec. 159(1) to (6) of the Act.
The Tribunal referred to a previous judgment and held that an assessee's legal representatives are not liable for penalty proceedings after the assessee's demise as per sec. 159 of the Act. Citing a specific case [2019] 417 ITR 45 (Madras) CIT vs. Gowri, the Tribunal rejected the Revenue's arguments supporting the penalty amount of Rs. 24,07,354/- and ordered in favor of the assessee. The Tribunal stated that all other arguments on merits were rendered academic, and the appeal of the assessee was allowed accordingly.
The order was pronounced in the open Court on 03.11.2023.
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