RAJENDRA POPAT SHINDE LH MINAXI RAJENDRA SHINDE DHULE,MAHARASTRA vs. DCIT CIRCLE DHULE, MAHARASTRA

ITSSA 1/PUN/2019Status: DisposedITAT Pune26 June 2025AY 1988-899 pages
AI SummaryAllowed

What were the facts?

The assessee, Rajendra Popat Shinde, is an individual. A search under section 132(1) was conducted on 11.07.1997, covering the block period 01.04.1987 to 10.07.1997. The assessee declared a total income of Rs. 27,86,000, with a net undisclosed income of Rs. 24,80,000 after set-off. Penalty proceedings under section 158BFA(2) were initiated. The Assessing Officer (AO) levied a penalty of Rs. 6,33,000. The assessee passed away on 02.06.2002. The penalty order was passed on 28.10.2016 against the legal heir, L/H Minaxi Rajendra Shinde. The assessee's appeal before the ITAT challenges the confirmation of this penalty by the CIT(A)-1, Nashik.

What did the Tribunal hold?

The Tribunal allowed the additional ground raised by the assessee. It held that no penalty can be imposed on the legal heirs of a deceased assessee where penalty proceedings were initiated during the lifetime of the assessee but did not culminate into a penalty order before the assessee's death. The Tribunal respectfully followed the judgments of the Madras High Court in CIT vs. S. Gowri and CIT vs. Dr. KCG Verghese (Late), which were passed after the decision of the Allahabad High Court in Kalawati Devi vs. ITO. The Tribunal noted that in cases of conflicting views between High Courts, the view favorable to the assessee should be followed. Consequently, the Tribunal directed the Assessing Officer to delete the penalty imposed under section 158BFA(2) on the legal heir. The appeal filed by the assessee was allowed.

What were the issues?

1. Whether the penalty under section 158BFA(2) should be deleted as there was no addition to the returned income based on seized material? (Question of law and fact). The assessee argued that no addition was made to the returned income based on seized material, hence the penalty should be deleted. The revenue relied on the orders of subordinate authorities and the High Court of Allahabad in Kalawati Devi vs. ITO, arguing that penalty under section 271(1)(c) can be imposed on legal heirs. 2. Whether the penalty under section 158BFA(2) dated 28.10.2016, passed against the legal heir after the assessee's demise on 02.06.2002, is null and void? (Question of law). The assessee contended that no penalty can be levied after the death of an assessee, especially when penalty proceedings were initiated during the assessee's lifetime but not concluded before death. The assessee relied on CIT vs. S. Gowri (Madras High Court) and CIT vs. Dr. KCG Verghese (Late) (Madras High Court).

Which sections of the Income-tax Act were involved?

Section 132,Section 158BFA(2),Section 158BB,Section 271(1)(c),Section 159

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE

For Appellant: Shri Sanket Joshi
For Respondent: Shri Milind Debaje
Hearing: 22.04.2025Pronounced: 26.06.2025

PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 12.12.2018 passed by Ld. CIT(A)-1, Nashik [Ld. CIT(A)’] for the block period 1.4.1987 to 10.07.1997. 2. The assessee has raised the following grounds of appeal :-

2 IT(SS)A No.01/PUN/2019 “1. The penalty u/s 158BFA(2), levied by the A.O. and confirmed by the CIT Appeal-1 should be deleted fully as the assessee is not a defaulter due to the fact that there is no addition to the returned income on the basis of the material seized under section 132. 2. The appellant craves leave to add/alter/amend/delete any of the grounds of appeal.”

3.

The assessee

The order continues below.

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