SMT. JETHIBAI v. GIFT TAX OFFICER
[Citation -1986-LL-0929-6]

Citation 1986-LL-0929-6
Appellant Name SMT. JETHIBAI
Respondent Name GIFT TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 29/09/1986
Assessment Year 1976-77
Judgment View Judgment
Keyword Tags failure to file return • return of net wealth • legal representative • regular assessment • legal obligation • additional tax • legal heir
Bot Summary: A legal heir of deceased assessee cannot be burdened with a penalty imposable on account of default committed by the deceased. WTO levied penalty on the legal representative of the deceased for the belated filing of the return. AAC s finding and the Hon ble High Court subsequently held Held, that the absence of a legal fiction as found in s. 24(B(2) of the Indian IT Act, 1922 would militate against the acceptance of the contention that the legal representative should be deemed to be the assessee in the present case so that he may be made liable to the penalty, if any, leviable on the deceased. In the absence of any provision similar to s. 159(2)(b) of the IT Act, by which Parliament clearly intended to levy penalty in the hands of the legal representative also in a case where the default had been committed by the deceased person, it is not possible to attribute to the legislature the intention to penalise the legal representatives for the default, if any, committed by the deceased person under the WT Act. Accordingly, penalty cannot be levied on the legal representative of a deceased assessee for the belated filing of a return by the deceased-assessee under the WT Act. Penalty proceedings under s. 18 cannot be initiated against a legal representative because a legal representative has not been made liable to be assessed to penalty. A perusal of the above case clearly shows that their Lordship observed that penalty proceedings for late filing of the return commenced against the person who had filed the return could not validly be continued after his death against his legal representative.


assessee by present appeal challenges order dt. 6th Sept., 1985 o f ld. AAC of Gift Tax, Indore, for asst. yr. 1976-77 on following ground: "That ld. AAC has erred in confirming penalty under s. 17(1)(a) of G T Act. On facts and circumstances of case confirming of penalty as illegal, bad in law and deserve to be quashed." ld. GTO noted that gift tax return was due on 30th June, 1976 and same was filed only on 20th Oct., 1978. Delay was considered on 27 months i n filing of return. After regular assessment tax was determined at Rs. 1,900. penalty proceedings under s. 17 of GT Act were initiated by ld. GTO and in reply, it was submitted on behalf of assessee that no assessment order had been received and that penalty proceedings be stayed till service of certified copy of assessment order. ld. GTO observed that it was not possible to stay penalty proceedings and that default had been committed by assessee. He, thus considered himself satisfied that assessee had without reasonable cause failed to furnish return within time and thus committed default cognizable under s. 17(1)(a) of Act. Thus, penalty of Rs. 1,026 was imposed vide order dt. 28th March, 1986 framed under s. 17(1)(a) of GT Act, 1958. penalty order was contested by assessee. case was argued before ld. AAC by Shri P. N. Porwal ld. Authorised Representative. ld. AAC refused to interfere pointed out that ld. counsel had not pointed out any reasonable cause which could justify assessee s failure to file return within time allowed under s. 13(1) of Act. Thus, agreeing with reasons of ld. GTO assessee s first appeal was dismissed. Hence present appeal by assessee before us on ground mentioned hereinabove. On behalf of assessee matter was argued by Shri P.C. Jain and reliance was placed on ratios in following cases. (a) In case of CWT vs. V. Vardarajan reported in (1980) 122 ITR 1014 (Mad) and (b) In case of Rameshwar Prasad vs. CWT reported in (1980) 17 CTR (All) 71: (1980) 124 ITR 77 (All). On behalf of Revenue, Shri M. P. Verma ld. Departmental representative supported order appealed against and also made mention of s. 19 of Act. Contentions raised and submissions made on behalf of contesting parties have been heard and considered and record carefully perused. Smt. Jethibai made gift on 15th Feb., 1976 and thereafter, unfortunately expired on 27th March, 1977. Due date for filing gift tax return was 30th June, 1977, which expired during assessee s life. legal heir Shri Devraj Ramlal filed return on 20th Oct., 1978. These are uncontroverted facts. No notice was either issued by ld. GTO or received by assessee or for matter legal heir for filing return of gift. In these circumstances it is, seen that default was committed by deceased. legal heir only brought default to end. It is not Revenue s case that any notice was at all defaulted by legal heir. penalty is seen to have been imposed in these circumstances. On behalf of Revenue mention was made of s. 19 of GT Act, 1958. said section deals with tax of deceased person payable by legal representative. In present case before us, we are not concerned with tax of deceased person. In fact issue at hand is penalty imposed for late filing of return. Thus, any reference to this section would appear to be irrelevant for controversy. In sub-s. 3 of section mention is also made of ss. 13, 14 & 15. Sec. 13 deals with filing of return of gifts. perusal of said section reveals that no legal obligation is cast on legal heir to file return and to be subsequently treated as assessee in default in case such return was not filed in time. Thus, reference to s. 13 is again unhelpful to Revenue. Sec. 14 is regarding return after due date and amendment thereof. This section is also of no consequence. Sec. 16 deals with altogether different situation, i.e., gift escaping assessment. From preceding discussions, it would be clear that reference by revenue to s. 19 does not in any way enhance their position. facts in present case as they are do not seem to be covered by provisions of this section. In present case, penalty is imposed for late filing of return by deceased. submission on behalf of assessee was made by Shri P.C. Jain, ld. advocate before us that such penalty could not be levied on deceased-assessee. Alternatively, legal heir of deceased assessee cannot be burdened with penalty imposable on account of default committed by deceased. This submission of ld. counsel appears to be quite sound and accepted. For such conclusion, support is available from ratio in case of Vardarajan (supra). In said case in response to notice issued by Department, deceased filed return of net wealth and also paid taxes due on basis of return. ld. WTO levied penalty on legal representative of deceased for belated filing of return. ld. First Appellate Authority cancelled penalty on ground that since default were committed by deceased legal representative could not be penalised. Tribunal confirmed ld. AAC s finding and Hon ble High Court subsequently held "Held, that absence of legal fiction as found in s. 24(B(2) of Indian IT Act, 1922 would militate against acceptance of contention that legal representative should be deemed to be assessee in present case so that he may be made liable to penalty, if any, leviable on deceased. In absence of any provision similar to s. 159(2)(b) of IT Act, by which Parliament clearly intended to levy penalty in hands of legal representative also in case where default had been committed by deceased person, it is not possible to attribute to legislature intention to penalise legal representatives for default, if any, committed by deceased person under WT Act. Accordingly, penalty cannot be levied on legal representative of deceased assessee for belated filing of return by deceased-assessee under WT Act. theory of treating penalty as additional tax is only for certain purposes and cannot be extended beyond its scope." issue in case before Hon ble Madras High Court was same as we are confronted with in present appeal. assessee, in our view gets full support from this ratio. Similarly in case of Rameshwar Prasad (supra) there was delay in filing return, penalty proceedings were commenced and assessee died. revenue s attempt was to continue proceedings after death of assessee, against legal representative. Hon ble Allahabad High Court disapproved Revenue s action with following observations: "The absence of s. 18 from being mentioned in s. 19(3) is significant. Penalty proceedings under s. 18 cannot be initiated against legal representative because legal representative has not been made liable to be assessed to penalty. notice to show cause cannot be issued to legal representative firstly, because he has not been made liable to show any such cause, and in next place, legal representative cannot be said to have committed any default in cases where deceased-assessee delayed filing of t h e return. Default was committed by original assessee. legal representative has not been made liable to be assessed for such default of original assessee." perusal of above case clearly shows that their Lordship observed that penalty proceedings for late filing of return commenced against person who had filed return could not validly be continued after his death against his legal representative. This ratio clearly covers issue raised in present appeal. For these two decisions no contra ratios were brought to our notice on behalf of Revenue. ld. GTO was, therefore, in present circumstances was not justified to initiate penalty proceedings and for matter imposed penalty. It is not ld. GTO s case either that legal heir defaulted filing of return knowingly or consciously. In fact legal heir brought to end default committed and continued by assessee. With such understanding we quash impugned finding and so also penalty order. In result, appeal is allowed. *** SMT. JETHIBAI v. GIFT TAX OFFICER
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