MRS. BEANT KAUR JUNEJA,NAGPUR vs. INCOME TAX OFFICER, WARD-4(2), NAGPUR

Tersely stated facts of the case are that; 2.1 The assessee is an individual engaged in the business of running petrol pump. The assessee filed her return of income [‘ITR’ hereinafter] on 26/09/2018 which was summarily processed u/s 143(1) of the Act accepting the returned ITAT-Nagpur Page 1 of 6

The case was called twice; none appeared at the bequest of the assessee. In absence of appellant, with able assistance from Revenue we deem it fit to reject adjournment dt. 15/03/2024 which besides informing the appellant is no more cited no convincing reasons therein. Consequently we proceeded to adjudicate the matter ex-parte u/s 24 of the Income Tax Appellate Rules, 1963. [‘ITAT-Rules’].

We have heard Ld. DR Mr Marathe and subject to rule 18 of ITAT-Rules, perused the material placed on records. We note that, after having failed to prove her case on merits, the appellant without touching provisions of section 273B of the Act challenged the levy on legal ground. We are mindful note that, after having instituted instant appeal u/s 253(1)(a) of the Act on 11/01/2023, the appellant through former letter of adjournment informed to have died. In the event the only question remains before us is whether a penalty levied u/s 271B of the Act is sustainable upon the death of assessee.

On the subject matter of penalty, there could be two situations viz; (i) assessee dies before the imposition of penalty or (ii) assessee dies after the penalty is imposed. The imposition of penalty in cases falling in first scenario is no-more res-integra in the light of decision in ‘ACIT Vs Late Shrimant FB Gaekwad’ [2008, 313 ITR 192 Gujarat], ‘CIT Vs Dr. K.C.G. Verghese’ [2018, 92 taxmann.com 400 & 2019, 416 ITR 155 (Mad.] which followed in ‘CIT Vs Smt S ITAT-Nagpur Page 3 of 6

Let us first analyse the provisions of section 159 of the Act which talks about the liability of legal representative [‘LR’ hereinafter of deceased assessee. Without reproducing the provision in verbatim, it shall suffice to state that, the word ‘any sum’ referred in s/s (1) of section 159 of the Act has been substituted in place of word ‘any tax’ which occurred in old section 24B of the Income Tax Act, 1922 so as to cover not only tax payable but also any penalty or interest. Therefore, the legal representatives of the deceased can also be liable to pay penalty on behalf of the deceased assessee pursuant to the provisions of Section 159(1) of the Act. This finds support in the ratio of Hon’ble Allahabad High Court in case of ‘Kalawati Devi Vs ITO’ [1981, 6 Taxman 252] wherein their Hon’ble Lordship have held that, section 159(1) clearly makes the legal representatives liable not only for the tax payable by the deceased-assessee but also for all sums which the deceased would have been liable to pay had he not died. Hence, penalty proceedings for a default committed by a deceased could be started or continued against the legal representatives, too. Similarly, the Hon’ble Kolkata High Court in ‘Smt. Tapati Pal Vs CIT’ [2002, 124 Taxman 123 Cal.] held that penalty proceedings for a default committed by deceased can be started or continued against the legal representative as against its earlier decision in ‘Taraknath Gayen and others Vs CEGAT’ [1987, 31 ELT 631 (Cal)].

In the instant case the penalty proceedings were initiated and culminated during the lifetime of the deceased assessee. Therefore, the only question thus, remains of its recovery from the estate if any succeeded by legal representative of deceased assessee. At this juncture it is worthwhile to note here that, s/s (4) of section 159 of the Act only empowers recovery of ‘the tax’ liability to the extent of estate of deceased assessee succeeded by LR. The conjoint reading of s/s (1) and s/s (4) of section 159 of the Act suggests that in case of death of assessee, ‘the tax’ subject to estate of deceased assessee delved could only be recovered (if any) from the legal representative. Conversely nothing other than tax can be fastened to the estate succeeded by the LR.

The honourable High Courts and Apex Court in catena of judicial precedents has held that penalty proceedings are quasi-criminal in nature. In criminal jurisprudence, a crime dies with a man and the legal representative of the deceased offender or criminal cannot be penalised for the offences or crimes committed by the deceased. As such penalty proceedings are different and distinct in nature than tax while tax are price paid for buying civilisation whereas the penalties are levied for the contumacious conduct of the wrong doer therefore such penalty proceedings abate on the death of the assessee. If recovery of , penalty is permitted against the estate of deceased, then it would clearly lead to permitting the enforcement of crime against the right of LR in succeeded estate.

In view of the decision of Hon’ble Calcutta High Court in ‘Taraknath Gayen and others Vs CEGAT’ [1987, 31 ELT 631 (Cal)] & ‘Omwati Vs UOI’ [2000, 125 ELT 136 (All.)] their Hon’ble Lordships have held that, the penalty amount is not ITAT-Nagpur Page 5 of 6

In view of aforestated discussion and restriction placed in s/s (4) of section 159 of the Act and further adopting the reasoning laid in ‘Taraknath Gayen and others Vs CEGAT’ & & ‘Omwati Vs UOI’ (supra) we allow the legal ground arose in the instant appeal and in consequence set-aside the impugned order and direct the Ld. AO to delete the penalty.

In result, the appeal of the assessee is ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Thursday, 25th day of April, 2024.