Case Law Details
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.
FULL TEXT OF THE ORDER OF ITAT PUNE
This assessee’s appeal for assessment year 20052006, arises against the National Faceless Appeal Centre [in short “NFAC”] Delhi’s Din and Order No. ITBA/NFAC/S/ 250/2023-24/1054836440(1), dated 03.08.2023, involving proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
2. It emerges at the outset that there arises the first and foremost preliminary issue in the instant case file regarding correctness of sec.27191)(c) penalty proceedings itself initiated after the assessee’s demise. This is for the precise reason that the assessee Shri Jayant Maneklal Wagle had left for his heavenly abode on 19.11.2007 followed inter alia by the Assessing Officer’s quantum assessment dated 30.12.2008; the CIT(A)’s first round lower appellate order dated 28.02.2014; sec.271(1)(c) penalty order dated 30.03.2016; this tribunal’s order in ITA.No.1521/PUN./2014 dated 14.11.2018 and NFAC’s impugned order before us dated 03.08.2023.
3. The Revenue vehemently argues before us that the impugned penalty proceedings are very much akin to an assessment giving rise to recovery of tax demands and therefore, the assessee’s legal representatives are liable for the corresponding default u/sec.271(1)(c) in light of sec.159(1) to (6) of the Act.
4. We find that the instant issue is no more res integra in light of [2019] 417 ITR 45 (Madras) CIT vs. Gowri decided against the department, as upheld in SLP (Civil) No.26378/2019 dated 23.08.2019 before the hon’ble apex court. Their lordships 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 of the Act. We adopt the very reasoning herein as well to decline the Revenue’s arguments supporting the impugned penalty of Rs.24,07,354/- in question. Ordered accordingly.
All other pleadings on merits stand render academic.
5. This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on 03.11.2023.
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