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2023 (2) TMI 259 - AT - Income TaxPenalty u/s 271E levied on the deceased person - cash loans from Asharam Bapu Group - violation of provisions of Section 269T - revenue submits that the representative of the assessee never informed about the death of assessee either at the time of issuance of show cause notice or during the penalty proceedings - CIT-A deleted penalty levy - HELD THAT - Out of Rs. 5.00 crores taken as cash loan, as found from the evidence seized during the course of search, the HUF of assessee offered Rs. 2.00 crores in IDS and balance of Rs. 3.30 crores were brought to tax u/s 69A in the hands of HUF of assessee in the assessment completed by ITO, Ward 1(3)(1), Surat u/s 143(3) of the Act. No addition of cash loan was made in the hand of individual assessee. When the loan was taken in the hand of HUF, the penalty for repayment of loan cannot be levied in the hands of assessee individual. On legal issue the ld CIT(A) also held that assessment order under Section 143(3)/153A of the Act was passed on 30/12/2017 in the name of legal heirs of assessee. The notice of penalty was served in the name of dead person; no notice was served on the legal heirs of the deceased assessee. Such notices issued in the name of dead person, is not curable even by applying provisions of Section 292B as has been held in Sumit Balkrishna Gupta 2019 (2) TMI 1209 - BOMBAY HIGH COURT and.Vikram Singh 2018 (1) TMI 1115 - DELHI HIGH COURT and Rajendra Kumar Sehgal 2018 (12) TMI 697 - DELHI HIGH COURT By referring the aforesaid decision, the ld. CIT(A) held that the penalty levied on deceased person is null and void. In our view the order passed by ld CIT(A) does not require any interference, which we affirm. - Decided against revenue.
Issues Involved:
1. Deletion of penalty levied under Section 271E of the Income Tax Act. 2. Issuance of notice in the name of a deceased person. 3. Applicability of Section 292B to cure defects in notices issued to deceased persons. 4. Attribution of loan transactions to the individual or HUF (Hindu Undivided Family). Detailed Analysis: Issue 1: Deletion of penalty levied under Section 271E of the Income Tax Act The Revenue appealed against the deletion of a penalty of Rs. 1,00,00,000/- levied under Section 271E for contravention of Section 269T. The penalty was imposed because the assessee allegedly repaid a cash loan of Rs. 1 crore. The JCIT issued a show cause notice, and despite the assessee's reply denying the existence of the loan, the penalty was imposed. The CIT(A) deleted the penalty, noting that the loan was attributed to the HUF and not the individual, and the HUF had disclosed the transaction under the IDS-2016. Issue 2: Issuance of notice in the name of a deceased person The assessment was completed in the name of the legal heirs of the deceased assessee. However, the penalty notice was issued in the name of the deceased on 05/03/2018, despite the assessee's death on 30/01/2017. The CIT(A) held that such notices are void ab initio and cannot be cured under Section 292B, referencing decisions from the Hon'ble Bombay High Court and other jurisdictions. Issue 3: Applicability of Section 292B to cure defects in notices issued to deceased persons The CIT(A) and the Tribunal held that notices issued in the name of a deceased person are not curable under Section 292B. This was supported by case laws, including Sumit Balkrishna Gupta Vs ACIT, Vikram Singh Vs Union of India, and Rajendra Kumar Sehgal Vs ITO. Issue 4: Attribution of loan transactions to the individual or HUF The CIT(A) found that the loan transactions pertained to the HUF of the assessee and not to the individual. The HUF had disclosed Rs. 2 crores under IDS-2016 and was taxed for the remaining amount. Therefore, no penalty could be levied on the individual assessee for the repayment of the loan. Conclusion: The Tribunal upheld the CIT(A)'s decision, affirming that the penalty levied on the deceased person was null and void. The appeal by the Revenue was dismissed, confirming that the loan transactions were correctly attributed to the HUF and that notices issued to deceased persons cannot be cured under Section 292B. The order was pronounced in the open court on 30th January 2023.
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