Smt. TAPATIPAL VS COMMISSIONER OF INCOME-TAX, 2002 PTD-CALCUTTA-HIGH-COURT-INDIA 1216 (1999)

(a) Income‑tax‑‑‑

‑‑‑‑Penalty‑‑‑Concealement of income‑‑‑Legal representative‑‑Assessment completed on legal heir of deceased‑‑‑Penalty imposed on legal heir‑‑‑Legal heir is a deemed assessee‑‑‑Initiation of penalty proceedings against legal heir justified‑‑‑Indian Income Tax Act, 1961, Ss. 159 & 271(1)(c).

(b) Income‑tax‑‑‑

‑‑‑Appeal to Appellate Tribunal‑‑‑‑Powers of Tribunal‑‑‑Power to remand‑‑ New plea raised for first time before Tribunal in penalty proceedings that assessee was ill during relevant period‑‑‑Tribunal justified in remanding matter to Assessing Officer‑‑‑Indian Income Tax Act, 1961, S. 254.

T was the legal heir of Dr. N. Dr. N died and the assessments were completed on the legal heir T. Penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, were initiated against the legal representative. The Commissioner of Income‑tax (Appeals) cancelled the penalties. On appeal to the Tribunal for the first time a plea was taken that the deceased was ill during the relevant period and hence the correct income could not be filed. The Tribunal restored the matter to the Assessing Officer to find out whether the assessee was ill. On a reference:

Held, (i) that since the plea of illness was raised for the first time before the Tribunal which required enquiry into facts the remand was justified;

(ii) that the heir was liable to pay the tax and treated as deemed assessee under section 159 of the Act after the death of her father and hence the initiation of penalty proceedings against the legal heir was justified.

JUDGMENT

On these applications under section 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following questions for both the reference applications for the assessment years 1983‑84 and 1984,85 for our opinion.

"(1) Whether, on the interpretation of section 159 of the Income Tax Act, 1961, the finding of the Tribunal that the legal heir is fully responsible for the default committed by the deceased was patently on reasonable and/or sustainable in law?

(2) Whether, on the facts and in the circumstances of the case, the order of remand by the Tribunal was legal and valid?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal acted legally in sending back the matter to the Assessing Officer after having held that the illness of the deceased had been established by evidence?

(4) Whether, on the facts and in the circumstances of the case, the disposal of the appeal by the Tribunal was in accordance with law?

(5) Whether, the finding of the Tribunal that the factum of illness had been argued for the first time is perverse and or inconsistent with the evidence on record?"

None appeared for the assessee though the matter was adjourned for five times. Heard learned counsel for the Revenue.

The assessee, Smt. Tapati Pal, is a legal heir of Dr. G.C. Nandi. Dr. G.C. Nandi died on July 28, 1985. The assessment years are 1983‑84 and 1984‑85 before us. The assessments were completed on March 25,1986, on the legal heir, Suit. Tapati Pal, and the total income was computed at Rs.1,88,110 and Rs.2,18,470, respectively, for both the years:

Thereafter, the penalty proceeding under section 271(1)(c) was initiated against the legal representative, i.e. this assessee. The penalty was imposed to the tune of Rs.73,040 and Rs. 92,843 under sec tion 271(1)(c) for both the years respectively. In appeal the Commissioner of Income‑tax (Appeals) has cancelled the penalties for both the years. In appeal before the Tribunal, the assessee has first time taken the plea that Dr. G.C. Nandi was ill during the relevant period and, therefore, the correct income could not be filed. As this plea was filed before the Tribunal, the Tribunal has restored the matter back to the Assessing Officer to find out the fact and consider the case of the assessee in case whether the assessee was ill. The Tribunal has concluded his reasoning in para. 4 of its order which reads as under.

"We have considered the submissions, facts and materials on record.

In our view the issue should be restored back to the file of the Assessing Officer to examine the fact of illness which has been argued for the first time before us. In our view, the illness of the deceased had been established by this evidence. Moreover, it is seen penalties under section 271(1)(x) were not levied for these two years considering the assessee's illness during the relevant time. However, we may make it clear that the legal heir is fully responsible for the default committed by the deceased as laid down in section 159 in the hollowing' terms. Any proceeding which could have been taken against the deceased, if he had survived, may be taken against the legal representative and all the provisions of this Act shall apply accordingly and also the legal representative of the deceased shall for the purposes for this Act, be deemed to he an assessee. In view of this mandatory provision, it is difficult to appreciate the view of learned counsel for the assessee that legal heir is not responsible for the default committed by the deceased. Though the liability of paying of penalties is limited to the value of the estate inherited by him or her."

When the plea of illness was taken for the first time before the Tribunal which requires enquiry into the facts usually that should not he considered at the stage of second appeal before the Tribunal. When any question or issue, is raised for the first tinge before the Tribunal, which required enquiry into facts The Tribunal cannot snake enquiry of facts in second appeal. However, wheat the Tribunal has entertained the plea which requires enquiry into facts, the Tribunal has no caption but to remit the matter back to the Assessing Officer. 'Thus, the Tribunal was fully justified in remitting the matter back to the Assessing Officer to give finding whether the assessee was ill during relevant period.

In view of the facts and that the assessee is liable to pay the tax and be treated as deemed assessee after the death of her father under the provisions of section 159 of the Income‑tax Act, there is nothing wrong in initiating the penalty proceedings against the assessee after the death of her father.

Thus, we answer the questions as under:

Question No.1 pertains to whether a legal heir is fully responsible for the default committed by the deceased under section 159 of the Act. We answer the question in the affirmative, i.e. in favour of the Revenue and against the assessee.

In the next question the assessee has challenged the order of the Tribunal whether the remand of the matter to the file of the Assessing Officer was justified.

On record we found that the plea of illness of Dr. G.C. Nandi was taken for the first time before the Tribunal, there; is nothing wrong in the order of the Tribunal in remanding the matter back to the Assessing Officer. Therefore, we answer the second question also in the affirmative, i.e. in favour of the Revenue and against the assessee.

In Question No.3 the assessee has raised the issue whether the Tribunal was justified in remanding the matter back to the Assessing Officer after having held that the illness of the deceased has been established by the evidence. We perused the order of the Tribunal. It is true that the Tribunal has accepted the fact that Dr. G.C. Nandi was ill, but what was the exact period of illness and whether that illness was so serious which has not permitted the assessee (G.C. Nandi) to file the estimate of advance tax and correct income. In the absence of that finding, we answer Question No.3 in the affirmative, i.e., in favour of the Revenue and against the assessee.

In Question No. 4, the assessee has challenged the legality of the order of the Tribunal. We perused the order of the Tribunal. There is nothing illegal in the order: The appeal has been disposed of by the Tribunal in accordance with law.

In Question No.5, the assessee has challenged the order of the Tribunal on the ground that the finding of the Tribunal is perverse as the Tribunal wrongly held that the plea of illness has been taken first time before the Tribunal in second appeal. We perused the orders of the Income‑tax Officer, Commissioner of Income‑tax (Appeals) and the Tribunal. In a penalty proceeding the plea of illness has not been taken before the Assessing Officer nor before the Commissioner of Income-tax (Appeals).

In view of these facts, it cannot be said that the finding of the Tribunal is perverse.

Accordingly, we answer this question, i.e. Question No.5, in the negative, that is, in favour of the Revenue and against the assessee.

Since the identical questions are referred in Income‑tax Reference No. 127 of 1994 and Income‑tax Reference No. 128 of 1994 and the assessment years are common, i.e., 1983‑83 and 1984‑85, we dispose of both the reference applications by this common order.

M.B.A./605/FCReference answered.