Law:

Section:

Section 221, read with section 159 of the Income-tax Act, 1961 [Corresponding to section 46(1), read with section 24B of the Indian Income-tax Act, 1922] - Collection and recovery of tax - Penalty payable when tax in default - Assessment years 1950-51 and 1951-52 - Whether legal representative of assessee cannot be proceeded against under section 46(1) of 1922 Act - Held, yes - Whether, therefore, in instant case, order passed by Tribunal holding that penalty under section 46(1) of 1922 Act could not be levied against heir (legal representative) of deceased assessee was correct - Held, yes FACTS The assessee died after filing returns for the relevant assessment years. After his death, assessments were made on his son and notices of demand under section 29 of 1922 Act were served on him as legal representative of his father. The legal representative, however, failed to pay the amount of tax. Therefore, the ITO imposed penalties on him. On appeal, the AAC upheld the ITO's order. On further appeal, the Tribunal held that the penalties under section 46(1) of 1922 Act could not be levied against the heirs of the deceased assessee. On reference : HELD Section 24B(2) of 1922 Act does not cover the case of the assessee dying after furnishing returns. The sub-section provides for returns being furnished by the legal representative of the assessee, who dies before any notice under section 22(1) or 22(2) or 34 of 1922 Act has been served and because of death no assessment proceedings has been yet begun against the deceased. In the instant case, it was clear that the assessee furnished returns and died thereafter, and therefore, the mention of section 24B(2) of 1922 Act was obviously incorrect. Section 24B(3) of 1922 Act was also not relevant, as it covered the case of no return or defective return having been made by the deceased after notice and the assessment being proceeded against the heir. The sub-section was, therefore, not relevant, because the father had sent in returns that apparently were proper. It cannot be disputed that two conditions must be satisfied before the default within the meaning of section 45 of 1922 Act can be treated as having been established.…

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