Suguna Radhakrishna Adappa Vs ITO (ITAT Mumbai)
Penalty Order Passed on Deceased Assessee Is Void: ITAT Mumbai Quashes Section 271AAC Penalty
The Mumbai Bench of the ITAT allowed the assessee’s appeal for AY 2017-18 and set aside the penalty of ₹1,04,171 imposed under section 271AAC(1), holding that the penalty proceedings were void ab initio as they were initiated and concluded against a deceased person. The assessee had died on 03.06.2021, whereas the show-cause notice under section 274 read with section 271AAC was issued on 29.03.2022 and the penalty order was passed on 18.09.2022, both dates being subsequent to the assessee’s death.
The Tribunal rejected the Revenue’s contention that the Assessing Officer had no knowledge of the assessee’s death, holding that lack of knowledge cannot validate proceedings against a dead person. Relying on the jurisdictional Bombay High Court decision in Geeta v. Principal Commissioner of Income-tax [2024] 166 taxmann.com 369 (Bom), the ITAT reiterated that it is the Department’s duty to ensure that notices are issued to persons capable of responding, and any notice issued to a deceased assessee is non est in law unless properly substituted by legal heirs.
Accordingly, the ITAT quashed both the penalty order and the NFAC order confirming it. However, the Tribunal clarified that the Assessing Officer would be at liberty to initiate fresh penalty proceedings against the legal heirs, subject to statutory conditions and limitation. The appeal was thus allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
