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

ITA 18/NAG/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7668 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 10-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY MARATHE LD.
• Keywords: Charitable institution; Reasonable cause
• Section: 273B; 143(1); 192; 139(1); 271B; 44AB; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR ITAT-Nagpur Page 1 of 6 (Through Virtual hearing from ITAT, Pune) BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल स ं . / ITA No. 018/NAG/2023 निर्धारण वषा / Assessment Year : 2017-18 Beantkaur Avtarsingh Juneja HP Petrol Pump, Dosar Bhavan, C. A. Road, Nagpur-440002. PAN: AFLPJ2956E . . . . . . . अपीलार्थी / Appellant बिधम / V/s Income Tax Officer Ward-4(2), Nagpur. . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : None for the Assessee Revenue by : Mr Abhay Marathe [‘Ld. DR’] स ु नवाई की तारीख / Date of conclusive Hearing : 22/03/2024 घोषणा की तारीख / Date of Pronouncement : 25/04/2024 आदेश/ ORDER PER G. D. PADMAHSHALI, AM; By this appeal challenges the DIN & order No. ITBA/NFAC/S/250/2022- 23/1047509176(1) dt. 18/11/2022 of the National Faceless Appellate Centre [‘NFAC’ hereinafter] for assessment year 2017-18 [‘AY’ hereinafter] passed u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereinafter] confirming the levy of penalty u/s 271B of the Act. 2. 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 Beantkaur Avtarsingh Juneja Vs ITO. ITA No.018/NAG/2023 ITAT-Nagpur Page 2 of 6 income however triggered a penalty proceedings u/s 271B for non-furnishing of Tax Audit Report [‘TAR’ hereinafter] within the prescribed time limit u/s 44AB r.w.s. 139(1) of the Act. 2.2 A penalty proceeding by issue of notice dt. 12/03/2020 u/s 274(1) r.w.s. 271B was initiated for non-furnishing TAR by the due of filing ITR for AY 2017-18 i.e. 07/11/2017. In response thereto the assessee neither made any submission nor any representation explaining reasonable cause beyond delay in filing TAR owning to which the Ld. AO culminated the proceedings by an order dt. 23/03/2020 imposing penalty of ₹1,50,000/- being to maximum permissible ceiling as against penalty @0.5%of total gross receipts/turnover ₹14,27,68,859/. 2.3 Aggrieved assessee carried the matter in appeal before first appellate authority u/s 246A(1)(a) of the Act. While dealing with assessee’s appeal the Ld. NFAC provided as much as six opportunities from January, 2021 to March, 2022, however, the assessee failed to effectively establish the reasonable cause beyond delayed filing of TAR to the satisfaction of the first appellate authority. The assessee’s reasoning that due to legal dispute over ownership of petrol pump books were in possession of her daughter and assessee had no access till the intervention of court could inspire no confidence and as such she failed in demonstrating reasonable cause in terms of section 273B of the Act. Consequently, the Ld. NFAC approbated the imposition and dismissed the appeal by placing reliance on ‘ITO Vs Gaytri Coal Supply’ 238 AT 16 (Patna), ‘CIT Vs Standard Mercantile Co.’ 160 ITR 613 (Patna) and ‘CIT Vs Mussadilal Ram Bharose’ [1987] 165 ITR 14 [Equi: 30 Taxman 546H]. Beantkaur Avtarsingh Juneja Vs ITO. ITA No.018/NAG/2023 ITAT-Nagpur Page 3 of 6 2.4 Still aggrieved by the aforestated imposition of penalty the appellant assessee set-up this appeal on a solitary ground that the appellate authority erred in law and facts & circumstance in confirming the penalty u/s 271B of the Act. 3. 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’]. 4. 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. 5. 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 Beantkaur Avtarsingh Juneja Vs ITO. ITA No.018/NAG/2023 ITAT-Nagpur Page 4 of 6 Gowri’ [2020, 116 taxmann.com 764 & 417 ITR 45, Madras], wherein it has been categorically held that, penalty proceedings could not initiated and concluded against the legal representative of the deceased assessee. The former ratio however cannot come to rescue the cases falling in the latter category. 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)]. Beantkaur Avtarsingh Juneja Vs ITO. ITA No.018/NAG/2023 ITAT-Nagpur Page 5 of 6 7. 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. 8. 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. 9. 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 Beantkaur Avtarsingh Juneja Vs ITO. ITA No.018/NAG/2023 ITAT-Nagpur Page 6 of 6 recoverable from the legal representatives of accused; as imposition of penalty is intended to penalise the accused, therefore, recovery of penalty from the legal representatives would amount to punishing the legal representatives. It is also in our knowledge that the co-ordinate benches in similar circumstance deleted the penalty in viz; ‘Bhuban Mohan Mitter Charitable Trust Vs ITO [1993, 45 ITD 617 (Cal)] and in ‘Bhagwansingh Shriramsingh L/H Dinesh Bhagwan Singh Vs ITO’ [2006, 9 SOT 73 (Mum)] 10. 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. 11. 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, 25 th day of April, 2024. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER प ु णे / PUNE ; ददना ां क / Dated : 25 th day of April, 2024. आदेशकीप्रनिनलनपअग्रेनषि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr.CIT Concerned. 4. The NFAC Delhi 5. DR, ITAT, Nagpur Bench, Nagpur 6.गार्डफ़ाइल / Guard File. आदेशान ु सार / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, प ु णे / ITAT, Pune.