2005 (10) TMI 552 - AT - Income Tax

Summary

Issues: Department's appeal against deletion of penalty under section 271(1)(c) for assessment year 2001-02.

Analysis:
1. The department contended that the legal representative of a deceased assessee is liable to pay penalty under section 271(1)(c) in addition to tax, citing section 159(1) and 159(2)(b) of the Income-tax Act, 1961.
2. The Tribunal disagreed with the department's stance, stating that a legal heir cannot be held accountable for the actions of a deceased assessee regarding penalty imposition.
3. Section 159(1) specifies that the legal representation is liable to pay any sum the deceased would have been responsible for if alive, while section 159(2)(b) allows proceedings against the legal representative for assessment and levying sums in accordance with section 159(1), not for penalty purposes.
4. The Tribunal emphasized that penalty proceedings are distinct from assessment proceedings, clarifying that section 159 does not encompass penalty proceedings, and the department's argument was based on a misinterpretation of the law.
5. Upholding the order of the Learned CIT, the Tribunal rejected the department's unfounded grievance, maintaining that penalty proceedings against a legal representative for the deceased's act are not permissible under section 159.
6. Consequently, the appeal was dismissed, affirming the deletion of the penalty under section 271(1)(c) for the assessment year 2001-02.