1986 (11) TMI 119 - AT - Income Tax

Summary

Issues:
Penalty under s. 17(1)(a) of the GT Act for late filing of gift tax return by a deceased assessee.

Analysis:
The appeal challenged the penalty imposed under s. 17(1)(a) of the GT Act for late filing of the gift tax return. The delay in filing was noted to be 27 months, resulting in a penalty of Rs. 1,026. The ld. GTO initiated penalty proceedings after the tax assessment, despite the assessee's request to stay proceedings until receipt of the assessment order. The ld. GTO found the assessee at fault for failing to file the return within the specified time under s. 13(1) of the Act, leading to the penalty imposition.

The ld. AAC upheld the penalty order, stating that no reasonable cause was presented to justify the delay in filing the return. The assessee argued that the deceased, not the legal heir, was responsible for the default, as the return was filed after the deceased's death. The legal representative filed the return after the due date, highlighting that no notice was received regarding the filing requirement. The Revenue's reference to s. 19 of the GT Act, dealing with tax payable by legal representatives, was deemed irrelevant to the penalty issue.

The assessee's counsel argued that a penalty could not be levied on a deceased assessee, and the legal heir should not be penalized for the deceased's default. Citing precedents, including the Vardarajan case, the Tribunal concluded that penalty on a deceased assessee could not be imposed on the legal representative. Similarly, in the Rameshwar Prasad case, the Allahabad High Court disapproved continuing penalty proceedings against the legal representative after the assessee's death.

The Tribunal found no contrary precedents presented by the Revenue and held that the penalty proceedings initiated by the ld. GTO were unjustified. As the legal heir rectified the default committed by the deceased without any conscious default on their part, the Tribunal quashed the penalty order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that penalty for late filing by a deceased assessee cannot be imposed on the legal representative. The decision was supported by legal precedents and the absence of legislative provisions making legal heirs liable for penalties on defaults committed by the deceased.