The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) hasquashed the invalid penalty order on deceased assessee under Section 159(2) of Income Tax Act, 1961.
The assessee Sri.Varadarajan Narayan Aiyarhas sold a property for Rs.2,14,22,160/- and received Rs.2,12,07,936/- from the purchaser after deduction of TDS at 1% as per the provisions of Section 194IA of the IncomeTax Act. Out of the consideration received of Rs.2,12,07,936/- Rs.2 crore was received by way of RTGS and balance Rs.12,07,936/- was accepted in cash.
Taking note of this cash transaction in respect of the transfer of the property, the Assessing Officer invoked the provisions of Section 269SS of the Income Tax Act. The Assessing Officer after affording the opportunity of being heard to the assessee, imposed a penalty of Rs.12,07,939/- under Section 271D of the Income Tax Act (being equal amount received by the assessee in cash).
The aggrieved assessee, affected by the penalty order under Section 271D of the Income Tax Act, amounting to Rs. 12,07,936/-filed an appeal before the first appellate authority. The assessee contended that since the assessee had died and the legal representative had informed the Assessing Officer about the assessee’s death, the penalty order under Section 271D of the Income Tax Act was legally invalid and should be nullified. However, the CIT (A) rejected the contentions raised by the assessee.
The legal representative of the aggrieved assessee has filed an appeal before the Tribunal against the penalty order. Despite the absence of the assessee or anyone representing them, the Tribunal proceeds to address the raised issue after hearing the counsel for the revenue.
The two-member Bench consisting of Judicial Member George George K and an Account Member Laxmi Prasad Sahu observed that “According to Section 159(2) of the Income Tax Act, any proceedings against the deceased person are considered as being against their legal representative and can be continued from the stage they were at when the person passed away. In this case, the penalty order was issued in the name of the deceased assessee, making it invalid. Considering the aforementioned reasoning and judicial precedents, we quash the penalty order as it was imposed on a deceased person.”
In result, the appeal filed by the assessee was partly allowed.
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