Late Jayant Maneklal Wagle Vs ACIT (ITAT Pune)
The appeal before the Pune Bench of the Income Tax Appellate Tribunal concerned penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2005-06. The appeal was filed against the order of the National Faceless Appeal Centre (NFAC) dated 03.08.2023.
At the outset, the Tribunal considered a preliminary issue regarding the validity of penalty proceedings initiated after the death of the assessee. The assessee, Shri Jayant Maneklal Wagle, had died on 19.11.2007. Despite his demise, subsequent proceedings continued, including the quantum assessment order dated 30.12.2008, the first appellate order of the CIT(A) dated 28.02.2014, the penalty order under Section 271(1)(c) dated 30.03.2016, the Tribunal’s earlier order dated 14.11.2018, and finally the NFAC order dated 03.08.2023.
The Revenue argued that penalty proceedings were similar to assessment proceedings that resulted in recovery of tax demands. Therefore, according to the Revenue, the legal representatives of the deceased assessee were liable for the alleged default under Section 271(1)(c) by virtue of Section 159(1) to 159(6) of the Act.
The Tribunal rejected the Revenue’s contention. It observed that the issue was already covered by the judgment of the Madras High Court in CIT vs. Gowri, reported in [2019] 417 ITR 45, which had been decided against the department. The Tribunal further noted that the Special Leave Petition filed against the said judgment had been dismissed by the Supreme Court on 23.08.2019.
Relying on the reasoning laid down in the Madras High Court judgment, the Tribunal held that legal representatives of a deceased assessee cannot be held liable in penalty proceedings after the death of the assessee under Section 159 of the Act. Applying the same principle to the present case, the Tribunal declined to sustain the penalty of Rs.24,07,354/- imposed under Section 271(1)(c).
Since the penalty proceedings themselves were held to be invalid, the Tribunal stated that all other arguments on merits had become academic and did not require adjudication.
Accordingly, the appeal of the assessee was allowed.
Assessee Represented by: Shri Sachin P. Kumar, Adv
FULL TEXT OF THE ORDER OF ITAT PUNE
