1990 (5) TMI 53 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under sections 271(1)(a) and 273(1)(b) of the Income-tax Act, 1961 on a deceased person.
2. Legality of assessment and penalty orders issued in the name of a deceased person.
3. Jurisdiction and applicability of proceedings under section 159 of the Income-tax Act, 1961.
4. Validity of penalty under section 273(1)(b) in the context of reassessment under section 147(a) read with section 143(3).

Detailed Analysis:

1. Imposition of Penalty on a Deceased Person:
The core issue was whether penalties under sections 271(1)(a) and 273(1)(b) of the Income-tax Act, 1961 can be imposed on a deceased person without bringing his legal representatives on record. The Tribunal noted that the penalties were imposed on the deceased without involving his legal representatives, which was a significant procedural lapse.

2. Legality of Assessment and Penalty Orders:
The Tribunal observed that the assessment order and subsequent penalty orders were issued in the name of the deceased, which is inherently void and illegal. The Tribunal emphasized that an assessment made on a dead person is a nullity in law and cannot be sustained. The Appellate Assistant Commissioner (AAC) had wrongly assumed that the appellant had accepted the assessment order since it was not challenged, but the Tribunal clarified that the doctrine of res judicata/estoppel does not apply to tax proceedings.

3. Jurisdiction and Applicability of Proceedings under Section 159:
The Tribunal discussed section 159 of the Income-tax Act, which deals with the liability of legal representatives to pay dues of the deceased. It was noted that proceedings initiated against a deceased person during his lifetime can be continued against his legal representatives. However, if the deceased had died before any proceedings were initiated, the proceedings must be taken against the legal representatives. The Tribunal concluded that the assessment and penalty orders issued in the name of the deceased without involving the legal representatives were void ab initio.

4. Validity of Penalty under Section 273(1)(b) in Reassessment Context:
The Tribunal examined whether penalty under section 273(1)(b) could be imposed when the assessment was made under section 147(a) read with section 143(3), which is a reassessment and not a regular assessment. Citing precedents, the Tribunal held that penalties under section 273(1)(b) are applicable only in cases of regular assessments. Since the assessment in this case was a reassessment, the penalty under section 273(1)(b) was not justified.

Conclusion:
The Tribunal allowed both appeals, canceling the penalties levied under sections 271(1)(a) and 273(1)(b) of the Income-tax Act, 1961. The assessment and penalty orders issued in the name of the deceased were declared void and non-est in law. The Tribunal emphasized the necessity of involving legal representatives in proceedings concerning deceased persons and clarified that penalties under section 273(1)(b) are not applicable in cases of reassessment.