Case Law Details
Beantkaur Avtarsingh Juneja Vs ITO (ITAT Nagpur)
The case of Beantkaur Avtarsingh Juneja versus the Income Tax Officer (ITO), Nagpur, has sparked significant debate regarding the recoverability of income tax penalties from the legal representatives of deceased individuals accused of tax offenses. In a recent decision by the Income Tax Appellate Tribunal (ITAT) Nagpur, the issue was thoroughly examined, shedding light on crucial aspects of tax law and its application in such scenarios.
The crux of the matter revolved around the imposition of a penalty under section 271B of the Income-tax Act, 1961, for the non-furnishing of a Tax Audit Report (TAR) within the prescribed time limit. Beantkaur Avtarsingh Juneja, an individual running a petrol pump business, faced penalty proceedings due to the delay in submitting the TAR for the assessment year 2017-18. Despite several opportunities provided by the authorities, Juneja failed to establish a reasonable cause for the delay to the satisfaction of the appellate authority.
The appellate process culminated in a significant legal question: whether a penalty levied under section 271B of the Income Tax Act remains sustainable upon the death of the assessee. The ITAT examined two potential scenarios: where the assessee dies before the imposition of the penalty, and where the assessee dies after the penalty is imposed.
In cases where the penalty proceedings are initiated and concluded during the lifetime of the deceased assessee, the issue shifts to the recoverability of the penalty from the estate succeeded by the legal representative. Section 159 of the Income Tax Act addresses the liability of legal representatives, stating that they may be liable not only for tax payable by the deceased assessee but also for any penalty or interest.
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