BALDEV RAJ CHAWLA,DELHI vs. ACIT, CENTRAL CIRCLE- 9, NEW DELHI

Briefly the facts of the case are that during the assessment proceedings, it was found that assessee has claimed to have earned capital gains on sale of property. However, no sale deed or bank statement or balance sheet was filed. Therefore, it was not established that the so called sale consideration has been received on transfer of capital asset. Therefore, the sale consideration of Rs.35 lakhs was taken as ‘income from other

The assessee has challenged the penalty order before the Ld.CIT(A). The appeal was filed by Smt. Ranjana Chawla, Legal Heir of Late Shri Baldev Raj Chawla i.e. the assessee, disclosing assessee had already expired on 10.06.2015. It was further submitted before the Ld.CIT(A) that the assessee Sri Baldev Raj Chawla has expired on 10th June, 2015 and it was within the knowledge of the A.O. The return of income for A.Y. 2015-16 was filed by Smt.Ranjana Chawla in the capacity of L/H on e-filing web site and also reply to penalty notice for A.Y. 2010-11 was filed through L/H before passing the penalty order for the year under consideration, copy of the same is filed in page 10 of the paper book which is dt. 18.01.2016 for A.Y. 2010-11. It was therefore stated that despite these facts penalty order has been passed in the name of deceased assessee, therefore, the same is not valid and is liable to be quashed, The Ld.CIT(A) noted that assessee’s Representative has not intimated the A.O. about the death of ITA 304/Del/2018 A.Y.:2005-06 Late Sh. Baldev Raj Chawla Through L/H Smt.Ranjana Chawla vs. ACIT assessee. Since the reply filed on behalf of assessee did not contain such information, therefore, in the absence of such information the A.O. had no clue about the issue of notice and passing the penalty order in the name of L/H. It was the duty of A.R. of the assessee to inform about the death of assessee. This ground was accordingly dismissed. The Ld.CIT(A) on merits also confirmed the penalty order and dismissed the appeal of assessee.

After considering rival submissions, I am of the view that penalty is not leviable in the matter. It is not in dispute that assessee expired on 10th June, 2016, copy of ‘Death Certificate’ is placed on record. Though the assessee filed a return of income for A.Y. 2015-16 through L/H and reply for A.Y. 2010-11 was also filed before the A.O. prior to passing of penalty order on 18th January, 2016 in the name of Late Shri Baldev Raj Chawla, but assessee’s Counsel has not specifically intimated about the death of the assessee. It is the duty of the A.R. of the assessee to intimate the A.O. about the death of the assessee, but he had failed to do so and as such he did not perform his professional duties as per law. However, the fact is clear that assessee expired prior to passing of penalty order and indirectly information was with the A.O. that assessee had expired. Therefore, A.O. should not have passed the penalty order in the name of the dead person. Further when this fact was brought to the notice of Ld.CIT(A), Ld.CIT(A) instead of quashing the proceedings conducted in the name of dead person has justified the action of A.O. in passing the impugned order in the name of the deceased assessee. It is well settled law that the order passed in the name of dead person is a nullity. The Ld.CIT(A) therefore instead of rejecting the claim of L/H of the deceased assessee, should have decided this point in the appellate order itself to Page 3 of 4 ITA 304/Del/2018 A.Y.:2005-06 Late Sh. Baldev Raj Chawla Through L/H Smt.Ranjana Chawla vs. ACIT correct all the errors in the order of penalty passed by A.O. Thus, the orders of authorities below cannot be sustained in law. The A.O. passed order in the name of dead person, therefore, penalty order is invalid, null and void. I accordingly set aside the orders of authorities below and quash the penalty.

In the result, the appeal of assessee is allowed. Order pronounced in the open Court.