Income Tax Appellate Tribunal - Pune
Rajendra Popat Shinde Lh Minaxi ... vs Dcit Circle Dhule, Maharastra on 26 June, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI R. K. PANDA, VICE PRESIDENT
AND
SHRI VINAY BHAMORE, JUDICIAL MEMBER
आयकर अपील सं. / IT(SS)A No.01/PUN/2019
Assessment Year : B. P. 01.04.1987 to 10.07.1997
Rajendra Popat Shinde, Vs. DCIT, Circle- Dhule, Dhule.
L/H Minaxi Rajendra Shinde
Dhule,
House No.137, Tikhi Road,
Mohadi Upnagar,
Dhule- 424311.
PAN : AFKPS4497J
Appellant Respondent
Assessee by : Shri Sanket Joshi
Revenue by : Shri Milind Debaje
Date of hearing : 22.04.2025
Date of pronouncement : 26.06.2025
आदे श / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 12.12.2018 passed by Ld. CIT(A)-1, Nashik [Ld. CIT(A)'] for the block period 1.4.1987 to 10.07.1997.
2. The assessee has raised the following grounds of appeal :- 2
IT(SS)A No.01/PUN/2019 "1. The penalty u/s 158BFA(2), levied by the A.O. and confirmed by the CIT Appeal-1 should be deleted fully as the assessee is not a defaulter due to the fact that there is no addition to the returned income on the basis of the material seized under section 132.
2. The appellant craves leave to add/alter/amend/delete any of the grounds of appeal."
3. The assessee has also raised following additional ground of appeal :-
"1. The penalty u/s 158BFA(2) dated 28.10.2016 passed by the A.O. against the Legal Heir after demise of the assessee on 02.06.2002, may be declared as null and void in view of the settled law that no penalty can be levied after demise of an assessee."
4. Facts of the case, in brief, are that the assessee is an individual. A search u/s 132(1) of the IT Act was carried out in the case of the assessee on 11.07.1997. The assessee flied return of income for Block Period 01.04.1987 to 10.07.1997. The undisclosed income is worked out as under :-
(i) Total income declared by the assessee in block return is Rs.27,86,000/-.
(ii) Less set off of Income returned/assessed of Rs.3,06,000/-.
(iii) Net undisclosed income as per sec. 158BB of Rs.24,80,000/-.3
IT(SS)A No.01/PUN/2019 The Assessing Officer initiated penalty proceedings u/s 158BFA(2) of the IT Act for concealment of undisclosed income mentioned as above. The assessee preferred an appeal before Ld. CIT(A)-II, Aurangabad. Ld. CIT(A)-II, Aurangabad has granted relief of Rs.14,25,000/- and restricted the undisclosed income at Rs.10,55,000/- vide his order dated 10.03.2005. Against the said order of Ld. CIT(A)-II, Aurangabad dated 10.03.2005, the cross appeals filed by the assessee as well as by the Revenue before this Tribunal. The Tribunal partly allowed the assessee's appeal on the ground of allowability of credit of taxes paid under VDIS 1997 and dismissed the appeal filed by the Revenue, being not maintainable for low tax effect vide ITA No.235/PN/2005 dated 15.01.2016. Giving effect to the order of this Tribunal dated 15.01.2016, a fresh show cause notice was issued to the assessee on 19.09.2016 which was duly served upon Smt. Meenaxi R. Shinde, the legal heir of the assessee. The legal heir of the assessee filed her submission in response to show cause notice on 26.09.2016. Accordingly, the matter has been considered in view of the assessee's legal heir reply on 01.07.2016. Ld. CIT(A)-II, Aurangabad granted the relief 4 IT(SS)A No.01/PUN/2019 only of Rs.14,25,000/- and confirmed the addition of Rs.10,55,000/- as undisclosed income. The assessee went to the Hon'ble High Court, Bench at Aurangabad against the said action of Ld. CIT(A)-II, Aurangabad. The Hon'ble High Court dismissed the writ petition of the assessee and only gave the direction to give credit of the taxes paid under VDIS 1997. Further, Pune Bench of the Tribunal has only partly allowed the assessee's appeal on the ground of allowability of credit of taxes paid under VIDS 1997. Accordingly, the Assessing Officer imposed penalty of Rs.6,33,000/- u/s 158BFA(2) of the I.T. Act, 1961.
5. After considering the written submissions of the assessee, Ld. CIT(A) dismissed the appeal of the assessee & confirmed the penalty of Rs.6,33,000/- u/s 158BFA(2) of the Act imposed by the Assessing Officer. It is this order against which the assessee is in appeal before this Tribunal.
6. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A) is unjustified. Ld. AR submitted before us that the assessee died on 02.06.2002 and the penalty cannot be imposed on legal heir of diseased assessee 5 IT(SS)A No.01/PUN/2019 where the penalty proceedings were initiated during the lifetime of the diseased assessee but which did not culminate into penalty order before the death of the assessee. In support of this contention, Ld. AR relied on various case laws and decisions passed by Hon'ble Courts and Coordinate Benches of this Tribunal. In this regard, legal compilation paper book was furnished before us. Accordingly, Ld. AR requested before the bench to delete the penalty of Rs.6,33,000/- imposed u/s 158BFA (2) of the IT Act.
7. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same. Ld. DR also relied on the order passed by Hon'ble High Court of Allahabad in the case of Kalawati Devi vs. ITO, W.P. No.315 of 1976 order dated 02.05.1980 wherein Hon'ble Court held that penalty u/s 271(1)(c) can be imposed on legal heirs of the assessee. Accordingly, Ld. DR requested to dismiss the appeal filed by the assessee.
8. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished 6 IT(SS)A No.01/PUN/2019 by the assessee. In this regard, we find that the assessee has raised an additional ground of appeal wherein the penalty imposed u/s 158BFA(2) was challenged on the ground that no penalty can be levied after demise of an assessee. In support of this contention, Ld. AR relied on the order passed by Hon'ble High Court of Madras in the case of CIT vs. S. Gowri, [2020] 116 taxmann.com 764 (Madras) wherein Hon'ble Court held that unless penalty proceedings are concluded against a living assessee, legal hairs cannot be held liable to face those proceedings or pay any sum determined as penalty payable u/s 271(1)(c) of the IT Act. Hon'ble Court dismissed the appeal filed by the Revenue by observing as under :-
"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 were initiated originally against the assessee- husband only and were not concluded against the said assessee, prior to his death on 23.01.2011.
8. Since the provisions of Section 271(1)(c) of the Act depend upon the guilty animus or mens rea on the part of the assessee concerned, naturally, as legal representative, the wife cannot be held liable to defend those penalty proceedings or be held guilty of any mens rea on the part of the husband. Therefore, unless the penalty proceedings are concluded against a living assessee, the legal heirs cannot be held liable to face those proceedings or pay any sum determined as penalty payable under Section 271(1)(c) of the Act.7
IT(SS)A No.01/PUN/2019
9. It is also imperative to mention here that as against the decision of the Gujarat High Court in the case of Late Shrimant F.P.Gaekwad (cited supra), an appeal in S.L.P.No.8956 of 2009 has been filed and the same got dismissed by the Hon'ble Supreme Court on 06.04.2009.
10. As such, respectfully following the said judgments of the Gujarat High Court and also the Madras High Court, we answer the aforesaid question in favour of the Assessee and against the Revenue.
11. Appeals of Revenue are, accordingly, dismissed. No costs. Consequently, the connected C.M.P.Nos.3549,3551,3553,3555 and 3556 of 2019 stand closed."
9. The assesse also relied on Hon'ble Madras High Court judgement in the case of CIT vs. Dr. KCG Verghese (Late), order dated 20.02.2018 passed in Tax Case (Appeal) No.854 of 2017 wherein Hon'ble Court held that the assessment having not been made on the legal representative the penalty cannot be imposed u/s 158BFA(2) of the IT Act on the legal representative. Ld. AR of the assessee also relied on a Co-ordinate Bench decision passed in the case of Late Kadir Usman Sheikh vs. ITO in ITA No.1116/PUN/2019 order dated 08.09.2022 wherein penalty u/s 271(1)(c) of the IT Act imposed on legal hairs was deleted by relying on judgement of Hon'ble Madras High Court in the case of CIT vs. S. Gowri, [2019] 417 ITR 45 by observing as under :-
"3. We next note that there is hardly any need for us to delve deeper in the relevant factual matrix. Suffice to say, the assessee herein Shri Kadir Usman Shaikh appears to have expired well before 8 IT(SS)A No.01/PUN/2019 the Assessing Officer's penalty order dated 28.03.2014. That being the case, we quote CIT vs. S.Gouri [2019] 417 ITR 45(Madras) to hold that the impugned penalty imposed by the Assessing Officer is not maintainable against the assessee's legal heir herein under section 159 of the Act. We therefore delete the impugned penalty for this precise reason alone. All other pleadings on merits stand rendered academic.
4. This assessee's appeal is allowed in above terms."
10. Respectfully following the above judgements passed by Hon'ble Madras High Court in the case of S. Gowri (supra) which was passed after the decision of Hon'ble Allahabad High Court in the case of Kalawati Devi (supra) which was also relied on by Co- ordinate Bench of this Tribunal, we find force in the arguments of Ld. counsel of the assessee that no penalty can be imposed on the legal heirs of the diseased assessee where the penalty proceedings were initiated during the lifetime of the diseased assessee but which did not culminate into penalty order before the death of the assessee. Regarding reliance of Ld. DR on the judgement of Hon'ble Allahabad High Court in the case of Kalawati Devi (supra), we find that there are conflicting views of two Hon'ble High Courts and in such kind of situation it is settled law that the view favourable to the assessee is required to be followed. Accordingly, we allow the additional ground raised by the assessee 9 IT(SS)A No.01/PUN/2019 and direct the Assessing Officer to delete the penalty imposed u/s 158BFA(2) of the IT Act on legal heir of the assessee. Thus, ground/additional ground raised by the assessee is allowed.
11. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 26th day of June, 2025.
Sd/- Sd/-
(R. K. PANDA) (VINAY BHAMORE)
VICE PRESIDENT JUDICIAL MEMBER
पुणे / Pune; दनांक / Dated : 26th June, 2025.
Sujeet
आदेश क ितिलिप अ ेिषत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(A)-1, Nashik.
4. The Pr. CIT/CIT concerned.
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, "B" बच, पुणे / DR, ITAT, "B" Bench, Pune.
6. गाड फ़ाइल / Guard File.
आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.