2024 (4) TMI 547 - AT - Income Tax

CIT(A) penalty order quashed for being issued in deceased assessee's name despite legal heir notification

Niruben Manubhai Patel, (L/H of late Vanmalibhai Mansukhlal Patel Versus The ITO, Ware – 1 (1) (1), Surat

ITAT Surat quashed CIT(A)'s order imposing penalty u/s 271(1)(c) because it was passed in the name of a deceased assessee. Despite legal heir informing ... Penalty u/s 271(1)(c) - An order in the name of dead person - appeal was filed by the legal heir of the assessee and legal heir of the assessee had intimated to the ld. CIT(A) that assessee had died inspite of this, the ld. CIT(A) passed the order in the name of dead person - HELD THAT:- We note that the information about the death of the assessee was available before the ld CIT(A), despite of this, the ld CIT(A) issued the notices for hearings, during the appellate proceedings in the name of dead person, and also passed the order in the name of dead person, which is not tenable in the law. That is, ld CIT(A) should have issued the notices, on the legal heirs of the assessee and the order should have been passed in the name of legal heirs of the assessee, which the ld CIT(A) has failed to do so. Therefore, order passed by the ld CIT(A) needs to be quashed and for that reliance is placed in the case of Savita Kapila [2020 (7) TMI 441 - DELHI HIGH COURT] wherein it was held that in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee under section 148 of the Act, after his death and, in such a case, it could not have been validity served upon assessee, said notice being invalid, was to be quashed. As decided in the case of PCIT vs. Maruti Suzuki India Ltd [2019 (7) TMI 1449 - SUPREME COURT] held that where assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity, would be without jurisdiction and was to be set aside. In the present case of assessee, the information about the death of the assessee was available before the ld CIT(A), despite of this, CIT(A) issued the notices for hearings, during the appellate proceedings in the name of dead person, and also passed the order in the name of dead person, which is not tenable in the law, hence we quash the order passed by ld CIT(A). Assessee appeal allowed. Issues Involved:1. Imposition of penalty u/s 271(1)(c) of the I.T. Act, 1961.2. Validity of penalty order passed in the name of a deceased assessee.Summary:Issue 1: Imposition of penalty u/s 271(1)(c) of the I.T. Act, 1961The assessee was penalized by the Assessing Officer (AO) u/s 271(1)(c) for not filing a return of income for AY 2012-13 and earlier years. The AO noted discrepancies in the income declared and initiated penalty proceedings, imposing a penalty of Rs. 1,87,005/-. The assessee contended that there was no intentional concealment of income and that the return was filed in response to notice u/s 148. The CIT(A) upheld the penalty, rejecting the plea that the penalty should not be imposed on a deceased person.Issue 2: Validity of penalty order passed in the name of a deceased assesseeThe penalty order was passed in the name of the deceased assessee, who died on 12/02/2022. The legal heirs informed the CIT(A) about the death, but the CIT(A) still passed the order in the name of the deceased. The Tribunal found this action unacceptable, citing the case of Savita Kapila vs. ACIT, where it was held that a notice issued to a deceased person is invalid. The Tribunal quashed the order passed by the CIT(A) as it was not tenable in law to issue notices and pass orders in the name of a dead person. Consequently, all other issues on the merits of the additions in the penalty proceedings were rendered academic and infructuous.Conclusion:The appeal of the assessee was allowed, and the penalty order passed by the CIT(A) was quashed due to it being issued in the name of a deceased person, which is invalid as per the legal precedents cited.