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TMI Blog2018 (4) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Act. In the case on hand, no penal proceedings have been initiated against the assessee, when he was alive. Assessment has not been done in the hands of the legal representatives and therefore, Section 159 of the Income-Tax Act, cannot be applied to the legal representative. The Tribunal has properly considered the facts, provisions and by applying the judgment of the Punjab and Haryana High Court in CIT v. Tikka Ram, through legal heir, Smt.Munni Devi reported in (2008 (5) TMI 710 - PUNJAB HARYANA HIGH COURT) held that there is no justifiable reason to impose penalty, on the legal representatives, under Section 158BFA(2) of the Income Tax Act. Going through the material on record, we concur with the same. - Decided against revenue - T.C.A. No. 854 of 2017 - - - Dated:- 20-2-2018 - S. Manikumar And V. Bhavani Subbaroyan, JJ. For the Appellant : Mr.TR.Senthilkumar For the Respondent : Mr.A.S.Sriram for Mr.S.Sridhar JUDGMENT ( Judgment of this Court was made by S. Manikumar, J. ) Tax Case Appeal is filed against the order, dated 01.07.2016, made in IT(SS)A No.16/Mds/2011, on the file of the Income Tax Appellate Tribunal Madras B Bench. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore this Tribunal. After withdrawal of appeal against the quantum addition made by the Assessing Officer, the Assessing Officer initiated penalty proceeding under Section 158BFA(2) of the Act. According to the Ld. counsel, the 3 I.T.(SS) A. No.16/Mds/11 penalty levied by the Assessing Officer is in respect of the conduct of the deceased assessee, therefore, after the expiry of the assessee no penalty can be levied against the legal heirs. (ii) The Ld.counsel further submitted that in respect of investment made by the assessee in land at Karapakkam, the same was disclosed to the extent of ₹ 18,41,238/-. However, the actual amount found to be invested by the assessee was ₹ 71,48,000/-. According to the Ld. counsel, the assessee has disclosed the investment in the landed property in the VDI Scheme, 1997 to the extent of ₹ 18,41,238/-. Therefore, according to the Ld. counsel, the investment in the land was within the knowledge of Revenue authorities. Merely because there was a difference which was found subsequently in the investment made in the land that cannot be a reason to levy penalty. According to the Ld. counsel, after the death of the assessee Shri K.C.G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explain why such a difference has come. In the absence of any proper explanation on the part of the assessee, namely, the legal representative, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. 5. After considering the rival submissions and the facts and circumstances of the case, the Income Tax Appellate Tribunal 'B' Bench, Chennai, vide order dated 01.07.2016, made in I.T.(SS) A.No.16/Mds/2011, held as follows:- 5. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, during the pendency of the appeal before this Tribunal against the quantum addition made by the Assessing Officer, the assessee Shri K.C.G. Verghese expired. Therefore, the legal representative withdrew the appeal for the reason best known to them. Admittedly, after withdrawal of the appeal by the legal representative, the Assessing Officer initiated penalty proceeding under Section 158BFA(2) of the Act. The question arises for consideration is whether there was any concealment of income by the assessee, namely, Shri K.C.G. Verghese? We have carefully gone through the provisions of Section 158BFA( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce of impugned investment and was not in a position to explain the same, they accepted the notice issued by the Assessing Officer under Section 148 of the Act. Therefore, the disclosure made by the legal representative is a bonafide and voluntary. Hence, the penalty cannot be levied at all. This principle was laid down by Punjab Haryana High Court in a proceeding for levying penalty under Section 271(1)(c) of the Act. This Tribunal is of the considered opinion that the same principle is equally applicable in respect of penalty levied under Section 158BFA(2) of the Act. Therefore, merely because the legal representative withdrew the appeal pending before this Tribunal after the expiry of the assessee Shri K.C.G. Verghese and the legal representative is not in a position to explain the source of investment, this Tribunal is of the considered opinion that that cannot be a reason for levying penalty under Section 158BFA(2) of the Act. This Tribunal is of the considered opinion that it is not a fit case for levy of penalty under Section 158BFA(2) of the Act. Accordingly, the orders of the lower authorities are set aside and the penalty levied under Section 158BFA(2) of the Act is de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The decisions relied by the tribunal reported in 8 DTR 74 is distinguishable to the fact of the case. Heard the learned counsel appearing for the parties and perused all the materials available on record. 8. Before adverting to the rival contentions, let us consider the relevant provisions of the Income-Tax Act, 1961. Section 158BFA pertains to levy of interest and penalty in certain cases. Sub-section (2) of Section 158BFA, reads as under:- 158BFA. Levy of interest and penalty in certain cases:- ........ (2) The Assessing Officer or the Commissioner (Appeals), in the course of any proceedings under this Chapter, may direct that a person shall pay by way of penalty a sum which shall not be less than the amount of tax leviable but which shall not exceed three times the amount of tax so leviable in respect of the undisclosed income determined by the Assessing Officer under clause (c) of Section 158BC: Provided that no order imposing penalty shall be made in respect of a person if - (i) such person has furnished a return under clause (a) of Section 158BC; (ii) the tax payable on the basis of such return has been paid or, if the assets seized co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under Section 147) of the income of the deceased and also for the purpose of levying any sum in the hands of the legal representative, in accordance with the provisions of Sub-section (1). 11. As per Section 271(1)(c) penalty can be levied only on that person who has concealed the particulars of income or filed inaccurate particulars of income. The use of the words such person in Section. 271(1)(c) clearly mandates the authority to levy penalty only on the same person who has filed the return of income and concealed the particulars or filed inaccurate particulars in such return. In the present case, return was filed by the deceased but penalty has been levied on the legal representatives. In the case on hand, return has been filed by the deceased assessee, against whom, no penalty proceedings have initiated and levied any sum. Penalty was not levied on the same person. 12. There is no definition of the word proceeding in Income-Tax Act. In Keshab Nataytm Banerjee v. Commissioner of Income-Tax reported in 252 ITR 888 (Cal.), in the context of Section 263, the Hon'ble Calcutta High Court held that since proceeding has not been qualified in Section 263, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the deceased, but could have been initiated against him, since he had expired and the same can be initiated against the legal representatives. In case, where the deceased earned income but did not file the return and expired, notice to file the return can be issued to the legal representatives and proceedings can be taken against the legal representatives. Clause (a) deals with a situation where proceedings have been initiated against the deceased, when he was alive, but before finalizing, expired. Clause (a) provides that those proceedings would continue against the legal representatives, from the stage at which they stood at the time of the death of the deceased. A fiction is created whereby proceedings initiated against the deceased when he was alive, would continue against the legal representatives, as they have stepped into the shoes of the deceased, without there being any effect on the legality of the proceedings. Once this legal fiction comes into operation, then Clause (c) will have the consequential effect of applying all the provisions of the Act. In the case on hand, no penal proceedings have been initiated against the assessee, when he was alive. Assessment has no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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