Attention dikduk/grammer geeks: Niftar???

I've heard this word at work, and read it in the Jewish Press newspaper and on various blogs, and it seems to mean "died," but not quite--people seem always to say, "s/he was niftar."

Is "niftar" related to "poter"? The text of Ba-meh madlikin (Mishna, Shabbat, chapter 2), found in Orthodox siddurim/ prayer books between the Kabbalat Shabbat and Maariv/Arvit/Evening Services for Shabbat/Sabbath tells us, "Rabbi Yosé poter b'chulan, chutz min ha-p'tilah, mipné sheh-hu osah pecham, Rabbi Yosé absolves him in all these cases except that of sparing the wick, because he thereby turns it into charcoal."

So "s/he was niftar" means "s/he was absolved," presumably of sin? This is a euphemism, to say that the deceased had sinned rather than that the deceased died???

And what's the connection, if any, between "poter" absolved, and "mutar," permissible?