Mrs. Gurneet Chawla vs. Deputy Commissioner of Income Tax, ITA No.2093/DEL/2019
ITAT Delhi has held that a penalty order under Section 271AAA of the Income Tax Act, 1961, passed in the name of a deceased person, is null and void. The decision reiterates the settled principle that any order passed against a non-existent entity, whether a company or natural person, is unsustainable in law.
Background of the Case
The late Paramjeet Singh Chawla was subjected to penalty proceedings under Section 271AAA. However, he passed away on 19 August 2017. The legal heir, Mrs. Gurneet Chawla, duly informed the Assessing Officer (AO) of his death on 13 February 2018, enclosing the death certificate and submitting a response to the show cause notice.
Despite being aware of the demise, the AO issued the penalty order on 19 February 2018 in the name of the deceased. The assessee challenged the legality of the penalty before the Commissioner of Income Tax (Appeals), but the CIT(A) ignored the key legal issue and proceeded to adjudicate the case on merits alone.
Key Observations by the ITAT
The Tribunal bench comprising Shri Vikas Awasthy (Judicial Member) and Shri M. Balaganesh (Accountant Member) made the following crucial observations:
- Passing an order in the name of a deceased person is without jurisdiction.
- The fact of death was communicated before the order was passed, and the AO acknowledged receipt of reply from legal heirs.
- Despite this, the penalty order was issued in the name of the deceased, making it legally unsustainable.
Citing established jurisprudence, the Bench concluded:
It is no more res integra that the assessment or penalty order cannot be passed in the name of a non-existing entity. Such orders are null and void ab initio.
Judicial Precedent Reinforced
The ITAT’s decision aligns with several precedents that prohibit passing tax orders on deceased individuals. Courts have consistently held that such orders violate principles of natural justice and lack jurisdictional validity.
Outcome
- The penalty order dated 19.02.2018 was quashed.
- The CIT(A)’s decision was set aside.
- The appeal was allowed in favour of the legal heir of the deceased taxpayer.
Conclusion
This ruling highlights a fundamental legal principle: Tax authorities must exercise due diligence when initiating or concluding proceedings, especially when notified of the taxpayer’s demise. Ignoring such information renders the order void, and tribunals will not hesitate to strike it down.
For legal heirs dealing with posthumous tax matters, this serves as a clear reminder to promptly notify the authorities and assert their rights when orders are wrongly issued.