2023 (11) TMI 393 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) initiated after the assessee s demise - liability of legal representatives - HELD THAT - We find that the instant issue is no more res integra in light of CIT vs. Gowri 2019 (3) TMI 1165 - MADRAS HIGH COURT decided against the department, as upheld in 2019 (8) TMI 1883 - SC ORDER hold in very clear terms that an assessee s legal representatives are not liable in penalty proceedings after his/her demise in terms of sec. 159 - We adopt the very reasoning herein as well to decline the Revenue s arguments supporting the impugned penalty in question. Assessee appeal allowed.

Summary

Issues involved: The correctness of penalty proceedings u/s 271(1)(c) initiated after the assessee's demise.

Summary:

Issue 1: Correctness of penalty proceedings u/s 271(1)(c) initiated after the assessee's demise

The appeal for assessment year 2005-2006 was against the National Faceless Appeal Centre's order involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961. The primary issue in the case was the initiation of penalty proceedings after the assessee's demise. The assessee had passed away before various assessments and orders were made, leading to the question of the liability of the legal representatives for the penalty. The Revenue contended that the penalty proceedings were similar to an assessment, making the legal representatives liable under sec. 159(1) to (6) of the Act.

The Tribunal referred to a previous judgment and held that an assessee's legal representatives are not liable for penalty proceedings after the assessee's demise as per sec. 159 of the Act. Citing a specific case [2019] 417 ITR 45 (Madras) CIT vs. Gowri, the Tribunal rejected the Revenue's arguments supporting the penalty amount of Rs. 24,07,354/- and ordered in favor of the assessee. The Tribunal stated that all other arguments on merits were rendered academic, and the appeal of the assessee was allowed accordingly.

The order was pronounced in the open Court on 03.11.2023.