2023 (5) TMI 163 - AT - Income Tax

Penalty u/s 271D - penalty order as passed on the deceased person - HELD THAT -As per section 159(2) of the Act, mere initiation of penalty proceeding correctly is not sufficient, but it ought to have been completed also in accordance with the said provisions. Any proceedings taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of death of the deceased. Therefore, when the penalty order was passed in the name of the assessee, he had already died. Hence, the penalty order is invalid. Decided in favour of assessee.

Summary

Issues involved:
The legal judgment involves issues related to the imposition of penalty u/s 271D of the Income-tax Act, 1961 on a deceased person, the validity of penalty order passed on a deceased individual, and the applicability of penalty provisions in cases involving legal representatives.

Summary:

Imposition of Penalty u/s 271D:
The appellant contested the penalty imposed under section 271D, arguing that the penalty order was invalid as it was passed on a deceased person. The Assessing Officer invoked section 269SS due to a cash transaction in a property transfer, leading to the penalty under section 271D. The CIT(A) rejected the appellant's contentions on both merit and technical grounds.

Validity of Penalty Order on Deceased Person:
The Tribunal observed that the penalty order passed on a deceased individual was invalid as per section 159(2) of the Act. Citing various judicial pronouncements, the Tribunal highlighted that penalty proceedings initiated against a deceased person must be completed in accordance with the law. The order imposing penalty on a dead person was deemed invalid, leading to the quashing of the penalty order.

Applicability of Penalty Provisions to Legal Representatives:
The Tribunal emphasized that penalty proceedings against a deceased individual must be continued against the legal representative from the stage at which they stood on the date of death. The penalty order passed on the deceased person was considered null and void, as confirmed by legal precedents. The Tribunal quashed the penalty order on the grounds of being passed on a deceased person and lack of validity.

In conclusion, the Tribunal partly allowed the appeal, quashing the penalty order imposed on the deceased individual under section 271D of the Income-tax Act, 1961. The judgment was pronounced on May 2nd, 2023.