TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 801
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.... Assessee made further appeal to the Tribunal and pending appeal, he died. Legal representatives withdrew the appeal. Thereafter, the Assessing Officer initiated penal proceedings, under Section 158BFA(2) of the Income-Tax Act, 1961 (Hereinafter referred to as "the Act"), against the legal representatives, on 31.01.2002 and levied penalty of Rs. 31,84,057/-. 3. Aggrieved by the order of penalty and also against the block assessment order, with respect to the undisclosed payment to purchase the land, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who confirmed the assessment. Against which, the assessee preferred an appeal in IT(SS)A No.16/Mds/2011, before the Income Tax Appellate Tribunal. Submissions made by the assessee, before the Income Tax Appellate Tribunal, Chennai, are as follows:- (i) Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the Assessing Officer levied penalty under Section 158BFA(2) of the Act consequent to completion of block assessment under Section 158BC of the Act. The Ld.counsel further submitted that the assessee has disclosed a sum of Rs. 53,06,762/- which was treated as undisclosed income in the block ....
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....ference in respect of the investment made in the landed property in the amount disclosed in the VDI Scheme and actual investment, and the person who actually invested is no more, according to the Ld. counsel, levy of penalty under Section 158BFA(2) of the Act is not justified. According to the Ld. counsel, there is reasonable cause on the part of the legal representative for not producing relevant details with regard to investment, therefore, the penalty levied by the Assessing Officer as confirmed by the CIT(Appeals) is not justified." 4. Before the Tribunal, departmental representative of the Office of the Assistant Commissioner of Income Tax, Chennai, made the following submissions, (i) On the contrary, Shri M. Murugaboopathy, the Ld. Departmental Representative, submitted that the investment in the landed property at Karapakkam was made by the deceased assessee to the extent of Rs. 71,48,000/-. However, what was disclosed in the VDI Scheme is only Rs. 18,41,238/-. Therefore, the difference of Rs. 53,06,762/- needs to be explained by the assessee. According to the Ld. D.R., the penalty is levied only on the assessee for not furnishing the particular details and not on the leg....
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....ficer exceeded the undisclosed income disclosed by the assessee in the return. The fact remains that the deceased assessee has disclosed the cost of acquisition of land in the VDI Scheme to the extent of Rs. 18,41,238/-. The seized material, which was identified during the course of search operation, disclosed the investment to the extent of Rs. 71,48,000/-. Therefore, the investment made by the deceased assessee is very much available before the assessing authority even before the date of search. Therefore, the deceased assessee may be in a better position to explain why Rs. 18,41,238/- was disclosed in the VDI Scheme, 1997, when the actual investment was identified at Rs. 71,48,000/-. 6. This Tribunal is of the considered opinion that the legal representative of the deceased assessee is handicapped because they could not trace out any papers after the expiry of the assessee. This impediment faced by the legal representative cannot be taken advantage by the Revenue authorities. This Tribunal is of the considered opinion that the power to levy penalty under Section 158BFA(2) of the Act is one thing and exercising of that power is entirely different. This Tribunal is of the consid....
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....n supporting of the above substantial question of law, the following grounds have been raised in the appeal, (i) The Tribunal has erred in holding that the penalty u/s 158 BFA r/w Section 159(2)(a) cannot be levied on the legal heir of the assessee by perversely assuming that the penalty proceedings were initiated after the demise of the assessee and the legal representative does not have the necessary details to explain the source of investment before the Assessing Officer. (ii) The Tribunal ought to have appreciated that the search, statements of the assessee and consequent assessment were completed 4 years prior to the demise of the assessee. The penalty proceedings were also initiated on 31.1.2002 and the assessee had demised on 14.2.06 and therefore the tribunal reasoning is faulted and not acceptable. (iii) The Tribunal has erred in holding that the Legal Heirs was handicapped without details after the demise of the assessee in as much as the assessee himself was very much alive and had participated during the assessment and initiation of the penalty proceedings and the legal heir in non other than the son of the assessee. (iv) The Tribunal ought to have appreciated ....
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....nder: "159. Legal representatives:- (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 (c) all the provisions of this Act shall apply accordingly." 10. Upon perusal of sub-section (2) of Section 158BFA of the Act, it is evident that the Assessing Officer or Commissioner (Appeals) has the power to impose penalty in course of any proceedings, on th....
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....ncome Tax Appellate Tribunal and during the pendency of the appeal, the assessee died. The legal representative of the assessee withdrew the appeal filed before the ITAT, Chennai, which dismissed the appeal. Consequent to the disposal of the appeal, penal proceedings under Section 158BFA(2) have been initiated in the block assessment order. 14. Penal proceedings have been initiated, only after the withdrawal of the appeal, filed by the deceased assessee, before the Income Tax Appellate Tribunal, at the instance of the legal representative of the deceased assessee. If the word, "proceedings", includes "penal proceedings", then the same should have been taken before the death of the deceased. The assessee expired on 14.02.2006. Appeal came to be dismissed as withdrawn. Only after the withdrawal of the appeal, proceedings under Section 158BFA(2) have been initiated only on 31.03.2008, in the block assessment order. 15. Section 159(1) imposes a liability on the legal representatives to pay any sum (including interest and penalty) in the like manner and to the same extent, as the deceased, had he not died. Liability to pay "any sum" arises only after an order is passed either for asse....