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TMI Blog2019 (3) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013, setting aside the penalty under Section 271 (1) (c) of the Act against the Assessee, namely, Smt.S.Gowri, wife of late Sri S.Shanmugam, who expired on 23.01.2011. 2. The following Substantial Question of Law arises for consideration of this Court : "Whether in the facts and circumstances of the case and in law, the Appellate Tribunal is correct in interpreting Section 159 of the Income Tax Act to the effect that penalty under Section 271 (1) (c) cannot be levied on the legal representative, ignoring the specific provision contained in Clause (2) (b) of Section 159 of the Act ? 3. A search was conducted at the residence of Sri S.Shanmugam on 13.02.2009 and the learned Tribunal, by the order impugned, dated 12.12.2013, upheld the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is an admitted position evidenced from penalty order that the assessee Shri S.Shanmugam had expired on 23.1.2011 well before imposition of penalty vide order dated 30.6.2011 (supra). In these circumstances, by quoting the case law of Hon'ble Gujarat High Court in the case of ACIT vs. Late Shrimant F.P.Gaekwad (2009) 313 ITR 192, we hold that penalty u/s 271 (1) (c) of the Act had been wrongly imposed by the Assessing Officer on the legal heirs of deceased assessee. On this sole ground, we dismiss all these appeals." 5. The Gujarat High Court, in the case of Late Shrimant F.P.Gaekwad, referred to above, dealt with penalty proceedings under the Wealth Tax Act under Section 18 (1) (c), which is akin to the proceedings under Section 158B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have been passed during the lifetime of the deceased and hence it cannot be said that any sum of penalty would have been payable by the executor, administrator or other legal representative under this Act, on the death of the deceased, if he had not died. The plain reading of subs.( 3) of s.19 makes it clear that the legislature has purposefully not included either s.18 or s.15B. It is also in consonance with the mandate of sub-s.(1) of s.19. Under s.19(1), neither the penalty can be levied on the executor, administrator or other legal representative nor can it be recovered from him. There is no question of incorporating s.18 or s.15B under sub-s.(3) of s.19. Therefore, neither s.19(1) nor s.19(3) casts any obligation on the executor, ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 15 of the said judgment are quoted below for ready reference : "14. Penal proceedings have been initiated, only after the withdrawal of the appeal, filed by the deceased assessee, before the Income Tax Appellate Tribunal, at the instance of the legal representative of the deceased assessee. If the word, "proceedings", includes "penal proceedings", then the same should have been taken before the death of the deceased. The assessee expired on 14.02.2006. Appeal came to be dismissed as withdrawn. Only after the withdrawal of the appeal, proceedings under Section 158BFA(2) have been initiated only on 31.03.2008, in the block assessment order. 15. Section 159(1) imposes a liability on the legal representatives to pay any sum (including i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect on the legality of the proceedings. Once this legal fiction comes into operation, then Clause (c) will have the consequential effect of applying all the provisions of the Act. In the case on hand, no penal proceedings have been initiated against the assessee, when he was alive. Assessment has not been done in the hands of the legal representatives and therefore, Section 159 of the Income-Tax Act, cannot be applied to the legal representative." 7. Having heard the learned counsel for the parties, we are of the considered opinion that the learned Tribunal was perfectly justified in setting aside the said penalty against the assessee/wife of the deceased late Sri S.Shanmugam, by the impugned order, as the penalty proceedings in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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