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Facts
The assessee passed away before the penalty order was passed. The Assessing Officer was informed of the assessee's death but proceeded to pass the penalty order against the deceased assessee. The CIT(A) acknowledged the death but directed the AO to implead the legal heir.
Held
The Tribunal held that no order can be passed against a dead person. Since the AO was aware of the assessee's death, the penalty order was quashed ab-initio. The direction of the CIT(A) was set aside.
Key Issues
Whether penalty proceedings initiated against a deceased assessee, after being informed of the death, are valid?
Sections Cited
270A, 274
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal by the assessee is directed against order dated 13.03.2025 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds:
“ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) UNIT-3, COIMBATORE ERRED IN:-
not setting aside the penalty proceedings against the Appellant inspite of the fact that the returned income of Rs. 16,83,480 and the assessed income of Rs. 16,83,480 were the same & hence, there was no underreporting at all as required u/s. 270A. 2. not setting aside the penalty proceedings against the Appellant inspite of the fact that the the Appellant had died on 22.5.2020 and the notice u/s 270A r.w.s. 274 was issued on 9.11.2020 and the penalty order u/s. 270A was passed on 26.8.2021. 3. directing the Assessing officer to implicate the legal heir of the Appellant. 4. not considering - (a) the fact that the Assessing officer was duly informed about the death of the Appellant vide response dated 28.5.2021 duly uploaded. (para 7 of the said letter) (b) various case laws mentioned in the grounds of appeal laying down that penalty proceedings cannot be initiated/continued against the dead person. (c) the fact that legal heirs cannot be implicated in respect of penalty proceedings against the dead person. And hence, the order dated 13.3.2025 directing the Assessing Officer to implicate legal heir of the Appellant deserves to be set aside in toto. Your Appellant craves leave, to add, alter, modify or delete all or any of the grounds of the appeal.”
We have heard rival submission of the parties and perused the relevant material including paper book filed by the assessee. The short issue in dispute in appeal raised in ground No. 2 of the appeal is whether the impugned order for levying penalty could be passed on dead person. The information of the death of the assessee was brought to the knowledge of the Assessing officer by the legal heir of the assessee on 28.05.2021. A copy of the acknowledgment of such information is placed on paper book page no. 10 to 13. Despite this information available to the assessing officer, he passed the impugned order on 26.08.2021 for levy penalty u/s 270A of the Act amounting to Rs. 70,31,812/-. The Ld. CIT(A) though acknowledged the fact of the death of the assessee, however sent the matter back to the Assessing officer observing as under “IV. Since the assessee is dead the legal heir has to be implicated. For that purpose an order has to passed immediately, wherein the assessing officer makes enquiries and comes out with the Legal Heir status and all notices, orders as well as all communications in the name of the assessee has to be send to the legal heir. The file is send back to the assessing authority with a request to implead the legal heir and once again appeal can be filed if need be.”
In our opinion, once the fact of the death of the assessee was brought to the knowledge of the Ld.AO, he was required to bring the legal heir of the assessee on record and thereafter pass order on him. Whereas, the assessing officer has passed the order of the dead person. It is settle law that no order can be passed on dead person and therefore, the present order passed by the Ld.AO is quashed ab-initio and cannot be sustained. The direction of the Ld. CIT(A) is accordingly set aside and the order of the Ld.AO is cancelled. The ground No.2 of the appeal of the assessee is accordingly allowed. The remaining grounds on merit are accordingly rendered academic and therefore, we are not required to adjudicate at this stage.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 30/04/2025.