If someone backbites to me about another person and I do not protest or anything (out of shyness) but I utterly resent the act in my heart, would some of my good deeds still be taken away by the person about whom I heard the backbiting on the Day of Judgment? Also, would I be punished in the grave for listening to it?

All perfect praise be to Allah, The Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad is His slave and Messenger.

Shyness is not an excuse in refraining from denying evil. If a person is being backbitten in your presence and you are able to denounce this evil but you did not do so, then you are sinful just like the person who did the backbiting. So it is feared that you would be subjected to the threat related to the backbiter in the grave or in the Hereafter.

Abu Haamid Al-Ghazaali said:

“The third kind is to refrain from listening to every kind of evil, because what is forbidden to say is forbidden to listen to. It is for this reason that Allah made the listener (to evil) equal to the one who consumes what is unlawful. Allah says (what means): {[They are] avid listeners to falsehood, devourers of [what is] unlawful.} [Quran 5:42] Allah also says (what means): {Why do the rabbis and religious scholars not forbid them from saying what is sinful and devouring what is unlawful?} [Quran 5:63] Therefore, keeping silent on backbiting is prohibited. Allah says (what means): {Indeed, you would then be like them.} [Quran 4:140] It is for this reason that the Prophet said, ‘The backbiter and the listener are both sinful.’”

Al-Iraaqi said about the above hadeeth, “It is Ghareeb (a hadeeth is termed ghareeb [scarce or strange] when only a single reporter is found relating it at some stage of the isnaad).”

An-Nawawi said:

“Know that (regarding) backbiting – just as it is forbidden for the backbiter to say it – (it) is also forbidden for the listener to listen to it and approve of it. Therefore, it is an obligation on someone who hears a person starting prohibited backbiting to forbid him from doing so if he does not fear an apparent harm. If he fears an apparent harm, he should deny it in his heart and leave that gathering if he is able to do so. If he is able to deny it with his tongue or to interrupt and divert the backbiting by saying something else, then he is obliged to do so. If he does not do so, he is disobedient (to Allah).”

That sin is wiped out with sincere repentance that fulfills its conditions, which is to quit the sin, to be determined not to return to it again, and to regret it. Is it a condition to seek the pardon of the person who was backbitten in your presence or not? There is a difference of opinion among the scholars on this; the view chosen by Shaykh Ibn Taymiyyah is that it is not an obligation to inform him because of the harm that it might lead to; it is enough to ask Allah for forgiveness for him and endeavor to mention him (in public) with what is good.

Allah knows best.