2015 (1) TMI 428 - HC - Income Tax

Right to represent on behalf of deceased father - Impleadment by legal heir - While the appeal against the assessment order before the tribunal, the assessee was died - Held that - in Ext.P3 order, the 3rd respondent Tribunal erroneously assumed that Sri.N.K.Mahamood who had filed the appeal before it against Ext.P2 order of the 2nd respondent, had died even before the filing of the said appeal. On the basis of the said finding, the 3rd respondent Tribunal did not permit the petitioner to implead the legal heirs of late N.K.Mahamood as appellants in the appeal before the Tribunal, for the purposes of pursuing the said appeal before the Tribunal. This was a patent mistake committed by the Tribunal and I am of the view that, the 3rd respondent Tribunal ought to have considered and passed orders permitting the petitioner to implead herself as the legal heir of late Sri.N.K.Muhamood who had died on 12.01.2006 during the pendency of the appeal before the Appellate Tribunal. The non-impleadment of the legal heir of late Sri.N.K.Mahamood effectively meant that the Tribunal passed Ext.P3 order in respect of a dead person and thereby rendered its order a nullity in law. - Directed to permit the petitioner to implead herself as the legal heir - Decided in favor of petitioner. Penalty proceedings u/s 271(1)(c) - Held that - The petitioner has not demonstrated any valid reason for interfering with the said order at this stage, in proceedings under Article 226 of the Constitution of India. Accordingly, leaving it open to the petitioner to challenge Ext.P6 order before the appellate authority under the Income Tax Act - If the petitioner files an appeal against Ext.P6 order within a period of one month from the date of receipt of a copy of this judgment, the appellate Authority under the Income Tax Act shall consider the said appeal on merits and pass orders within a period of six months from the date of receipt of the appeal, by which time he would also have the benefit of considering the order of the 3rd respondent Tribunal in the appeal against Ext.P2 order of the 2nd respondent. - Matter remanded back.

Summary

Issues:
1. Impleadment of legal heirs in appeal before Appellate Tribunal.
2. Validity of penalty order under section 271(1C) of the Income Tax Act.

Impleadment of Legal Heirs:
The case involved the petitioner, daughter of a deceased assessee, challenging the assessment order passed on her late mother. The assessment was initially completed on the mother's husband, who also passed away during the appeal process. The Appellate Tribunal erroneously rejected the appeal without allowing the petitioner to implead herself as the legal heir of her deceased father. The High Court held that the Tribunal's failure to consider the impleadment application rendered its order null and void. The Court quashed the Tribunal's order and directed a fresh consideration of the appeal after permitting the petitioner to be impleaded as the legal heir within six months.

Validity of Penalty Order:
Regarding the challenge against the penalty order imposed under section 271(1C) of the Income Tax Act, the High Court noted that the petitioner was heard before the order was passed. The Court emphasized that the appropriate remedy against this order lay in filing an appeal before the Commissioner of Income Tax Appeals. The petitioner was given the option to challenge the penalty order by filing an appeal within one month. The High Court refrained from issuing any specific direction to the respondents regarding this order, leaving it to the appellate authority to consider the appeal on its merits and pass orders within six months.

In conclusion, the High Court directed a fresh consideration of the appeal with the petitioner as the legal heir and left the decision on challenging the penalty order to the petitioner's discretion by following the prescribed appellate process.