H.S. AHLUWALIA, J.M. assessee in this case was individual deriving income from salary, interest on security, house property, dividend, etc. During relevant assessment, sum of Rs. 10,80,000 was included as assessee's income from undisclosed sources being amount which was invested by assessee benami in name of Shri Kalyan J.B. Rana for purchase of shares of Rohtas Industries Ltd. and S.K.G. Sugar Ltd., two companies of Sahu Jain Group. Since sources of purchase could not be explained, it was held that amount had been invested by assessee benami in name of Shri Rana and this view was ultimately upheld by Hon'ble Supreme Court. ITO, therefore, initiated penalty proceedings for concealment of this income under s. 28(1)(c) of Indian IT Act, 1922 ('the Act,). In response to show-cause notice, one of legal representative of assessee who had died, contended that question of assessment of said amount was still in dispute and there was no question of levying penalty even if Supreme Court had confirmed addition. In fact, Patna High Court had held that Shri Rana was not benamidar for assessee. ITO, however, rejected this contention and levied penalty of Rs. 9 lakhs. 2 . On appeal, CIT (A) was of opinion that there was difference between relevant provisions of 1922 Act and IT Act, 1961 ('the 1961 Act'). Under 1922 Act, penalty for concealment could not be levied upon legal representative of deceased assessee. Moreover, there had been considerable difference of opinion with regard to ownership of shares and in view of decision of Hon'ble Supreme Court in famous case ofCIT vs. Anwar Ali (1970) 76 ITR 696 (SC),it could not be said that assessee had concealed particulars of his income or had deliberately furnished inaccurate particulars thereof. He, therefore, cancelled penalty. Revenue has come up in second appeal before us. 3. We have heard representatives of parties at length in this appeal. Two or three issues are involved therein. first dispute relates to legality of imposition of penalty on legal heirs of deceased assessee. CIT (A) has summarily accepted assessee's contention by referring to difference in relevant provisions of 1922 Act and 1961 Act. According to him, decision of Madras High Court inCWT vs. V. Varadarajan (1980) 122 ITR 1014would lead to conclusion that penalty could not be levied on legal representative under Act. After carefully considering all these relevant authorities on subject, we are not inclined to agree with said conclusion. authority relied upon by him, namely,V. Varadarajan'scase (supra) is decision under WT Act, 1957 ('the 1957 Act'), where there is specific provision relating to continuation of proceedings against legal representatives. This provision is contained in sub-s. (3) of s. 19 of 1957 Act, according to which, when process if sought to be enforced against legal representative in respect of asset inherited from dead person only provisions of ss. 14, 15 and 17 of 1957 Act are to applyquathe legal representatives. It is because of absence of s. 18 of 1957 Act in sub-s. (3) of s. 19 that probably influenced their Lordships to hold that legal representative of assessee could not be liable for penalty in respect of default committed by deceased. said authority, therefore, is not conclusive of matter. 4. At time of hearing, representative of assessee further sought to support conclusion of CIT (A) by referring to decision of Madhya Pradesh High Court inCWT vs. Abdul Mazid Khan (1983) 35 CTR (MP) 316 : (1984) 147 ITR 53 (MP). This case also proceeds on practically same reasoning as decision of Madras High Court inV. Varadarajan'scase (supra) and purports to follow same. However, again, it is case under 1957 Act. Therefore, both these authorities would not necessarily lead us to endorse view adopted by CIT (A). 5 . Some support was sought to be derived by certain observations by Kanga and Palkhivala in their commentary onThe Law and Practice of Income tax, Seventh edn., vol. 1, p. 45, wherein learned authors have again given view in favour of assessee that under 1922 Act, penalty proceedings could not be started and continued against legal representative for any default committed by deceased. This opinion has been given in first four lines of para 3. said opinion is sought to be supported by authorities lines of para 3. said opinion is sought to be supported by authorities referred to in foot-note 23. We, however, do not feel that it in any way helps assessee. Two authorities are referred to in foot-note-one is decision of Bombay High Court inEllis C. Reid vs. CIT 5 ITC 100.Now this decision was given by Bombay High Court before insertion of s. 24B of 1922 Act. In this behalf, we may refer to commentary on theLaw of Income tax of Indiaby V.S. Sunderam, Eighth edn., wherein at page 791, learned author has traced history of s. 24B and mentioned that this section was inserted in 1933 to fill said gap in Act. Prior to that Bombay High Court had in case ofEllis C. Reid(supra) thought that no assessment could be made on deceased person in absence of express provision to that effect. This section had rendered obsolete old rulings. Therefore, decision in case ofEllis C. Reid(supra) would in no way help assessee. decision inAttorney General vs. Canter 22 Tax Cases 422cannot affect decision in present case because this is not case under 1961 Act at all. 6 . In this behalf, we have tried to go through some of other relevant authorities on subject, which in fact, are under 1961 Act. first important decision was delivered by Supreme Court inC.A. Abraham vs. ITO (1961) 41 ITR 425 (SC). process of assessment was sought to be enforced against firm which had been discontinued and question arose as to whether penalties under s. 18A(4), (6), (7), (8) and (9) of Act, etc., could be levied. It was held that expression 'assessment' used under Chapter IV of Act was not used merely in sense of computation of income and when s. 44 of Act declared that partners or members of firm or association shall be jointly and severally liable to assessment, it referred to liability to computation of income under s. 23 of Act as well as application of procedure for declaration and imposition of tax liability and machinery for enforcement thereof. Penalty was considered to be only additional tax, ultimately, it was held that imposition of penalty under s. 28 consequent upon assessment of firm which consisted of two partners after death of one of them was valid. 7. next important authority in this behalf is decision of Supreme Court inCIT vs. Bhikaji Dababhai & Co. (1961) 42 ITR 123 (SC). In this case, ITO had issued notice to assessees under s. 40 of Hyderabad IT Act, 13 57F, requiring them to show cause as to why penalty should not be imposed upon them and later by order levied penalty. In meantime, State of Hyderabad merged with Indian Union and Indian legislature by Finance Act, 1950, provided that law existing in said State would cease to have effect except for purposes of levy, assessment and collection of income tax and super tax. question arose whether penalty levied under Hyderabad IT Act, could be recovered ? Tribunal had held that order imposing penalty was not valid as Hyderabad IT Act had ceased to have effect. Of course, appeal of assessee was dismissed on ground that appeal to AAC was not competent. On reference, High Court held that appeal was competent, but provisions relating to imposition of penalty were not saved by Finance Act and, therefore, order imposing penalty was bad. On appeal to Supreme Court, it was held (reversing decision of High Court) : " That penalty imposed under taxing statute upon person in view of his dishonest or contumacious conduct was in nature of additional tax and t h e fact that under Hyderabad IT Act, distinct provisions were made for recovery of tax due and penalty did not alter true character of penalty imposed under IT Acts of India and Hyderabad. proceedings for imposing penalty initiated under s. 40 of Hyderabad IT Act could be continued after enactment of s. 13 (1) of Finance Act, 1950. order levying penalty was, therefore, valid. " 8. Yet another important Supreme Court decision in this behalf isAddl. ITO vs. E. Alfred (1962) 44 ITR 442 (SC). In this case, one E had died intestate leaving behind him son and eight daughters. For asst. yr. 1946-47, notice was issued to respondent under s. 22 of Act in regard to E's income and he was assessed under s. 24B(2). After service of notice of demand, respondent defaulted in payment of tax and penalties were imposed upon him under s. 46(1) of Act. respondent challenged levy of penalty and High Court quashed orders. On appeal to Supreme Court, it was held (reversing decision of High Court) : " ...that penalties could be imposed on respondent as assessee n d that orders levying penalties were valid. He was himself assesseequathe assets and liability to tax of E ; he was, therefore, assessee in default and liable to imposition of penalty for this default. generality of definition of 'assessee' in s. 2(2) of Indian IT Act, 1922, is sufficient to include even legal representative who is to pay tax, though out of assets of deceased person. By s. 24B(1) of Indian IT Act, 1922, legal representative is made liable to pay tax which might have been assessed but not paid by deceased person or which might be assessed after his death. It covers all situations and contingencies, and makes liability absolute, limited, however, to extent to which estate of deceased is capable of meeting charge. word 'assessment' bears different meanings, and in one sense it comprehends entire process of computation and levy of tax. It is in this sense that legal representative becomes assessee by fiction, and this fiction has to be fully worked out to its logical conclusion. " In this behalf, we may like to point out that there is essential difference between provisions of 1961 Act and 1957 Act, and consequences resulting under two Acts are not exactly identical. For example, if person dies before close of accounting year, he may still be liable to be taxed on income earned by him during year, but he could not be liable to pay any Wealth tax if he dies before relevant valuation date which is at close of accounting year. Again, under 1957 Act, normally legal representative of deceased, Wealth tax assessee may not be liable because term 'assessee' as defined in s. 2(c) of 1957 Act would not initially include legal representative except to limited extent to which provisions can be made applicable to him under s. 19. It may be pointed out that s. 19 and other sections following it find place in Chapter V of 1957 Act which deals with liability to assessment in special cases. As pointed out above, s. 18 specifically excluded from sub-s. (3) of s. 19 and that was reason behind two decisions under 1957 Act. As against this, s. 24B finds place in Chapter IV of 1922 Act itself which primarily deals with assessment. liability in special cases corresponding to Chapter V of 1957 Act is dealt with in Chapter V of 1922 Act, which deals with guardians, trustees, agents, etc. These two separate Chapters provide for liability in special cases and, therefore, their scope would be strictly restricted to provisions providing for such liability whereas Chapter IV of 1922 Act deals with case of normal assessments and s. 28 relating to penalty also finds place therein. What we mean to say is that s. 24B of 1922 Act does not exactly serve same purpose as s. 19 of 1957 Act though language of two may be similar. There is also small difference in language of two sections. While language of s. 19(1) and 19(2) of 1957 Act corresponds with language of s. 24B(1) and 24B(3) of 1922 Act, there is s. 24B(2) in 1922 Act, according to which representative of deceased can be treated as assessee himself but under corresponding provision in s. 19(3) of 1957 Act, only provisions of ss. 14, 15 and 17 are to apply to executor, administrator or other legal representative. Since connotation of term 'tax' in various Supreme Court authorities above referred to is that it also includes penalty, which is only additional tax under normal rules of interpretation, legal representative of assessee would be liable to pay penalty under 1922 Act though not under 1957 Act because of sub-s. (3) of s. 19 in which only ss. 14, 15 and 17 are mentioned and not s. 18. 9 . decision of Supreme Court inBhikaji Dababhai & Co.'scase (supra) was of cases considered by Madras High Court inV. Varadarajan'scase (supra). But then their Lordships have not dealt with matter exhaustively and have not followed conclusion resulting therefrom by referring to decision of Supreme Court inJain Bros. vs. Union of India (1970) 77 ITR 107 (SC),wherein there are some observations that penalty proceedings are not essentially continuation of proceedings relating to assessment. Thereafter, their Lordships referred to two decisions inE. Alfred'scase (supra) andAddl. ITO vs. T.M.K. Abdul Kassim (1962) 46 ITR 149 (SC)but did not choose to elaborate issue as they were not concerned with interpretation of any provision similar to s. 46, which relates to recovery of tax and penalties and according to their Lordships, was not involved therein. In fact, distinction between 1922 Act and 1957 Act has itself been recognised by their Lordships at page 1022 of report wherein after referring to decision inA. & F. Harvey Ltd. vs. CWT 1977 CTR (Mad) 1 13 : (1977) 107 ITR 326 (Mad),it was pointed out that there was no fiction in s. 19 that deceased could be deemed to have lived till valuation date if he actually died earlier. Ultimately, their Lordships held that there cannot be any analogy true or false between provisions of 1961 Act and 1957 Act in view of basic and fundamental difference existing between chargeable events themselves and decision under that Act would have no application to cases falling under 1957 Act. In result, we are of opinion that conclusion of CIT (A) in this behalf is not sustainable and penalty proceedings could be continued against present respondents. 10. next question that arises is as to whether penalty proceedings can be said to have been taken after unreasonable lapse of time. argument taken by assessee before CIT (A) was that there had been inordinate delay in levy of penalty. CIT (A) has also relied upon this as ground for his decision. However, taking into consideration over all facts and circumstances of case, we are of opinion that delay in present case could not be considered to be fatal. It was conceded on behalf of assessee that there was no limitation prescribed for penalties under Act. addition itself was being agitated by assessee and it was ultimately confirmed by Hon'ble Supreme Court by its order dt. 19th Sept., 1972 inCIT vs. S.P. Jain 1972 CTR (SC) 443 : (1973) 87 ITR 370 (SC).Earlier addition itself had been deleted by Tribunal and by Patna High Court and as such there was no question of levying penalty. order passed during that period by Tribunal consequential to Supreme Court decision under s. 66(5) of Act, was as late as 30th Nov., 1976. In pursuance of order of Tribunal, ITO passed order under s. 33(5) of Act on 2nd Sept., 1981. present penalty order was passed on 27th Nov., 1981 and, therefore, cannot be said to have been delayed because delay was due to non-communication of judgment of Supreme Court to Tribunal and of order of Tribunal to ITO. In these circumstances, ITO had no alternative but to keep penalty proceedings pending. There may have resulted in some delay in matter but for all that Revenue is not to be blamed. We would, therefore, disagree with reasoning of CIT (A) for deleting penalty on this score also. 11. third dispute in this matter relates to merits of penalty. Unfortunately, none of authorities below has discussed this matter from proper angle. ITO has rejected assessee's contention on ground that Supreme Court had confirmed addition and, therefore, decision of Tribunal and Patna High Court had become irrelevant. CIT (A) has accepted said contention relying upon decision inAnwar Ali'scase (supra) and referring to fact that it could not be said that disputed amount really represented income of assessee. We have, therefore, gone through entire facts which are best summarised from headnote of Supreme Court's decision inS.P. Jain'scase (supra) as under : " assessee, who held certain shares in Rohtas Industries Ltd. and S.K.G. Sugars Ltd., sold them in July 1952, to two companies, D.J.C. Ltd. and M.C. Ltd. These two companies sold those shares to Rana of Nepal in two lots each on 30th May, 1953, and 28th Aug., 1953. One Wood, General Manager of Allahabad Bank, was said to have delivered shares to Rana after collecting sale price of Rs. 10,80,000 in cash on those two days and given amount to one Durga Prasad on loan against two promissory notes and receipts. There was no official record of transaction, no prior correspondence, no broker and no receipt for cash payment of Rs. 10,80,000. Neither D.J.C. Ltd. nor M.C. Ltd. nor Rana nor Durga Prasad had any account with Allahabad Bank in May or August 1953, shares were not in bank's custody, sale transactions were not through bank and no reason was given for unusual procedure of routing money through Wood. letters of Wood produced by assessee, confirming transactions, though written on official note-paper of bank, gave no reference number of bank and there were no office copies of letters with bank. Rana never attended any general meeting of shareholders nor appointed any proxy in his behalf, and did not take any steps till April 1955, to have shares registered in his name or to collect dividends amounting to have shares registered in his name or to collect dividends amounting to Rs. 2 lakhs. It was only in April 1955, when price of those shares went up in market and they had to be sold, that Rana opened account with Allahabad Bank and in that account were credited sums amounting to Rs. 38 lakhs got by sale of those shares. Practically entire sum of Rs. 38 lakhs was encashed by nine bearer cheques for large amounts by Das, peon of Ashoka Marketing Co., company controlled by assessee, and Das was said to have handed over cash to Rana at premises of Sahu Jain & Co., company with which assessee was closely associated. Rana had been introduced to Dujari (Accountant of Ashoka Marketing Co.) by assessee and Dujari had asked Das to render service to Rana. share certificates were found to be in possession of Ashoka Marketing Co. after their sale to Rana. Though several opportunities were given, Rana did not appear before authorities to explain circumstances under which he purchased those shares, but only his letter was produced. Wood was not produced and there was nothing to show that letters were written by him. ITO held that Rana was merely name-lender for assessee, and that sum of Rs. 10,80,000 belonged to assessee, and source of that amount n o t having been explained by assessee, assessed sum as assessee's income from undisclosed sources. AAC upheld order of ITO, but on further appeal, Tribunal held that purchase by Rana was not benami transaction and directed deletion of sum of Rs. 10,80,000 from total income. In arriving at its conclusion, Tribunal,inter alia, treated transactions of sale by vendor companies to Rana as having been established by letters of Wood, and as not having been challenged by Department, and speculated as to manner in which Rana came to make definite offer for purchase of shares and actually purchased shares across counter of bank.... " ultimate conclusion of their Lordships of Supreme Court was that though questions referred to High Court did not challenge validity of findings given by Tribunal, in fact, Tribunal had failed to take into account relevant material on record in arriving at its findings and had further acted on inadmissible evidence and misread same, Court could ignore findings and re-examine issues arisen for decision on facts and material on record. On facts, only reasonable inference that could be drawn from circumstances was that Rana was mere name-lender and IT authorities were fully justified in drawing that inference. Now, if Rana was mere name-lender, it follows that amount invested for purchase of these shares was obviously income of assessee. Therefore, it can be concluded without any fear of contradiction that assessee not having disclosed purchase of these shares or source thereof concealed particulars of his income or deliberately furnished inaccurate particulars thereof and was liable to penalty within meaning of s. 28(1)(c). conclusion arrived at by CIT (A) on this behalf cannot be supported in view of observations of Supreme Court and assessee was clearly liable to penalty as levied by ITO. 12. In result, appeal is accepted. order of CIT (A) is set aside and order of ITO is restored. ANAND PRAKASH, A.M.: I have had privilege of going through order of my learned brother, Hon'ble Judicial Member. I entirely agree with his reasoning and conclusions. Yet I will like to make certain observations of my own as follows : 2. learned CIT (A) has deleted penalty on three grounds : (i) that order of penalty has been passed very late, (ii) that on merits, case of concealment is not made out, and (iii) that penalty under s. 28(1)(c) cannot be imposed on legal heir of deceased, penalty proceedings having been initiated against deceased himself. 3. My learned brother has well brought out that finding of learned CIT (A) with regard to first point referred to above is not factually correct and, therefore, quashing of penalty proceedings on that basis was not justified. I agree with this finding and have nothing more to add to what my learned brother has already stated. There has been no inordinate delay in passing of penalty order in present case. 4. addition of Rs. 10,80,000 was made by ITO to assessee's total income of accounting period beginning on 1st Nov., 1952 and ending on 31st Oct., 1953, corresponding to asst. yr. 1954-55 on ground that assessee had made investment of aforesaid sum in shares in name of Shri Rana on 30th May, 1953 and 28th Aug., 1953 as follows : Date Investment in shares of Rs. 30th May, 40,000 shares of S.K. Sugar 3,20,000 1953 Mills Ltd. 35,000 shares of S.K. Sugar . 2,80,000 Mills Ltd. 50,000 shares of Rohtas . 4,00,000 Industries Ltd. 28th Aug., 10,000 shares of Rohtas 80,000 1953 Industries Ltd. . . 10,80,000 5 . facts on basis of which addition in question came to be made by ITO have been brought out by my learned brother from headnote of Supreme Court decision inS.P. Jain'scase (supra). It is true that on basis of these facts, Tribunal had negated finding of ITO, and Hon'ble Patna High Court had confirmed finding of Tribunal. But on reference to Hon'ble Supreme Court, order of Tribunal and decisions of Hon'ble High Court were reversed and their Lordships summarized facts and circumstances which according to their Lordships go to establish that Rana was mere name-lender as follows : " 1. There is no evidence to show that Rana's financial position was such that he was in position to purchase shares in question. It is not shown that he had any bank balance either in this country or in any other country. 2. Rana has not cared to appear before authorities under Act though several opportunities were afforded to him to do so for explaining circumstances under which he purchased those shares. 3. purchase price of shares amounting to several lakhs of rupees was not paid by cheque or cheques. same is said to have been paid in cash. This is wholly improbable circumstance. 4. Rana had not entered into any correspondence with companies concerned for purchase of shares. He had not engaged services of any brokers for making purchases. It is not shown how Rana came to know that companies in question were wanting to sell shares. 5. It is not shown why transactions in said shares should have taken place in presence of Wood. Wood had nothing to do with transactions. Neither Rana nor companies which sold shares had any dealings with Allahabad Bank at relevant time. share scrips were not in possession of Allahabad Bank. money was not paid through Allahabad Bank. letters of Wood on which considerable reliance was placed did not bear any office serial number. No copies of those letters were available in Allahabad Bank. It is not explained how Wood came into picture. 6. If Rana was purchaser of shares, he should have been in possession of share scrips. They were his documents of title. We have earlier pointed out that share scrips were in possession of Ashoka Marketing Co. It is not explained how those scrips happened to be in possession of Ashoka Marketing Co. 7. Even after alleged sale of shares in favour of Rana, Rana did not take any steps to have shares registered in his name for nearly one and half years. This circumstance again is not explained. 8. Rana did not care to collect huge dividends that were declared in respect of those shares totalling about Rs. 2 lakhs for year and half. 9. Rana never cared to attend any general meeting of company nor did he appoint any proxy on his behalf. nor did he appoint any proxy on his behalf. 10. It was only when price of those shares went up in market and that when they had to be sold Rana is said to have opened account in Allahabad Bank in which were credited sums of about Rs. 38 lakhs got by sale of those shares. Practically all these amounts were said to have been realised by, Rana by issuing bearer cheques in favour of peon of Ashoka Marketing Co. who had been casualty introduced to him. Rana could not have been too big to go to bank to collect these huge amounts if he was real owner of money. He is said to have waited in premises belonging to Sahu Jain Co. and sent these bearer cheques through said peon. It is further said that with view to see that peon did not misappropriate money, Rana used to send his own driver with him. If that was so it is not explained why Rana did not give bearer cheques to his driver himself if driver was s o trustworthy and it is not explained what Rana did with money so collected. above enumerated circumstances are tell tale. only reasonable inference that can be drawn from those circumstances is that Rana was mere name-lender. conclusion reached by ITO and AAC that Rana was mere name-lender is reasonable conclusion. Neither Tribunal nor High Court has given any good reasons for rejecting those conclusions. next question is whether Department has established that Rana was benamidar for assessee. As mentioned earlier, it is not sufficient if Department establishes that Rana was benamidar for somebody. It must go further and establish that Rana was benamidar of assessee. There are good reasons to come to conclusion that Rana was benamidar of assessee. These are, as have been noted already : 1. close association of assessee with Rana, which is evident from record. It was assessee who introduced Rana to Nandlal, who was close associate of assessee and it was Nandlal, who introduced Rana to Allahabad Bank. Rana did not go to collect money from Allahabad Bank, but is said to have stayed in premises of Sahu Jain & Co. company with which assessee was closely associated and further peon who got money from bank was residing in house of Sahu Jain, 11, Clive Row, when notice under s. 37 of Act was served on him. According to this peon, A.C. Das, it was Dujaria who asked him to render that service to Rana. According to Dujaria, it was assessee Jain, who introduced him to Rana and asked him to assist Rana. It also appears from evidence adduced on behalf of assessee that huge amount of about Rs. 38 lakhs collected by Allahabad Bank was realised by Rana by issuing bearer cheques to above-mentioned peon of Ashoka Marketing Co., assessee's concern. Further, it was assessee who produced so-called affidavit of Rana at same time would not produce Rana for examination for obvious reasons. 2. D.J.C. Ltd. and M.C. Ltd. would not have sold suddenly shares without any previous correspondence or without even informing company's secretary or director, unless, of course, there was intercession by some one who had influence over those companies. 3. There is no admissible evidence to establish that Rana brought bagful of currency notes and gave it to companies. Even if Rana had paid price in cash to companies, companies would have deposited those amounts in some bank. On other hand, those companies are said to have given entire price realised by sale of shares immediately as loan to one Durga Prasad on basis of two promissory notes. In discussing this aspect, we had pointed out incongruity in first and second statements of Durga Prasad to show that loan of Rs. 10,80,000 was said to have been given to him by vendor companies in one lump sum that he carried this huge amount from Calcutta to Nagpur and gave it to his munim and that he never deposited that amount in any bank. There is also total absence of any material to show how Durga Prasad had spent these amounts. All these circumstances would clearly indicate that story is fictitious one and that alleged loan to Durga Prasad is pure fabrication. It is, therefore, clear that Durga Prasad is no other than mere puppet of assessee. 4. shares alleged to have been purchased by Rana were found to be in possession of Ashoka Marketing Co. concern practically owned by assessee. Unless assessee was purchaser of those shares, shares could not have been in possession of Ashoka Marketing Co. It is reasonable to assume that after alleged sale, assessee was in possession of shares through Ashoka Marketing Co. 5. After shares were sold money was collected and brought from bank as pointed out above by peon, A.C. Das, of Ashoka Marketing Co. on nine bearer cheques and according to A.C. Das he paid those amounts to Rana in premises of assessee, Sahu Jain at 11, Clive Row. From circumstances above enumerated ITO and AAC were fully justified in drawing inference that Rana was name-lender for assessee. Neither Tribunal nor High Court has given good reasons for displacing conclusions reached by ITO and AAC. They had duty to examine reasons given by those authorities before rejecting them. " 6 . In view of aforesaid observations of their Lordships of Hon'ble Supreme Court, it is not possible to hold that deceased assessee had not withheld truth from Department. Rana was assessee's as such (sic), assessee knew this fact, and yet he did not disclose it. Rather he did his level best to confuse and camouflage facts as becomes clear from reading of Hon'ble Supreme Court's decision. design and deliberateness of assessee's action is, thus, too patent to be missed. it is in fact writ large throughout text of decision of Hon'ble Supreme Court. 7. It is no doubt true that entirety of circumstances must reasonably point to conclusion that disputed amount represented assessee's income before penalty under s. 28(1)(c) can be imposed on assessee-Anwar Ali'scase (supra). But on facts of present case, it has, in my opinion, been reasonably established that assessee had made aforementioned investments in shares on 30th May, 1953 and 28th Aug., 1953 and that investments were camouflaged by him in benami of Rana and that source of investment in question was concealed income of assessee earned by him during previous year. No other inference appears possible from facts found by their Lordships of Hon'ble Supreme Court in present case. It is not merely case where assessee's explanation has been disbelieved. It is one of those cases where elaborate stratagem has been adopted by assessee to camouflage real facts. Penalty for concealment in such case will be justified as has been held by their Lordships of Hon'ble Supreme Court inD.M. Manasvi vs. CIT 1972 CTR (SC) 437 : (1972) 86 ITR 557 (SC), wherein their Lordships observed,inter alia, as follows : " ...The present is not case of inference from mere falsity of explanation given by assessee, but case wherein there are definite findings that device had been deliberately created by assessee for purpose of concealing his income. assessee as such can derive no assistance fromAnwar Ali'scase (supra). " These observations aptly cover facts of present case also. In view o f this, imposition of penalty for concealment of income under s. 28(1)(c) was, in my opinion, justified on merits. 8. third ground for cancellation of penalty, as given by learned CIT (A), is purely legal and is based on presumption that penalty under s. 28(1)(c) could not be imposed on legal heirs of deceased, for default committed by deceased. 9. On death of person, his proprietary rights in his estate vest in his representative. following discussion inSalmond on Jurisprudence, (Twelfth edn.) on this subject is illuminating : " rights which dead man thus leaves behind him vest in his representative. They pass to some person whom dead man, or law on h i s behalf, has appointed to represent him in world of living. This representative bears person of deceased, and, therefore, has vested in him all inheritable rights, and has imposed upon him all inheritable liabilities of deceased. Inheritance is in some sort legal and fictitious continuation of personality of dead man, for representative is in some sort identified by law with him whom he represents. rights which dead man can no longer own or exercise inpropria persona, and obligations which he can no longer inpropria personafulfil, he owns, exercises, and fulfils in person of living substitute. To this extent, and in this fashion it may be said that legal personality of man survives his natural personality, until, his obligations being duly performed, and his property duly disposed of, his representation among living is no longer called for (b). representative of dead man, though property of deceased is vested in him, is not necessarily beneficial owner of it. He holds it on behalf of two classes of persons, among whom he himself may or may not be numbered. These are creditors and beneficiaries of estate. Just as many of man's rights survive him so also do many of his liabilities ; and these inheritable obligations pass to his representative, and must be satisfied by him. Being, however, merely representative of another, he is not liable inpropria persona, and his responsibility is limited by amount of property which he has acquired from deceased (c). He possesses double capacity, and that which is due from him in right of his executorship cannot be recovered from him in his own right. " above juridical position is given effect to under Act through s. 24. assessment under that section is no doubt on legal representative but it is in respect of income of deceased person. legal representative's liability under this section is limited 'to extent to which estate is capable of meeting charge'. charge that has to be met is with regard to 'the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died'. 10. Now, what is meaning of term 'tax assessed' or 'tax which would have been payable by him under this Act if he had not died' ? 1922 Act does not define these terms, nor even term 'tax' (unlike 1961 Act, which defines term 'tax'). Its meaning will, therefore, have to be inferred from setting of section. It appears may it be noted, under Chapter IV of said Act, which deals,inter alia, with 'deductions and assessment'. Secs. 18 to 21 deal with deductions, and ss. 22 to 39 deal with 'assessment'. Sections dealing with 'assessment' include sections dealing with procedure of assessment (ss. 22, 23 and 29), power to make provisional assessment (s. 23B), power to make accelerated assessments (s. 24A, s. 25), procedure to make assessments in case of deceased person (s. 24B), and of HUF after partition (s. 25A), assessment to super tax of certain companies (s. 23A), registration of firms and change in constitution of firm (ss. 26 and 26A), penalties for various defaults (s. 28), reopening of anex parteassessment (s. 27), reopening of assessment in case of escaped income (s. 34), appeal, revision and rectification of assessment (ss. 30, 31, 33, 33A, 33B, 35) etc. 11. scope of 'assessment' under Chapter IV is, thus, very wide. It may amply computation of total income, computation of tax, imposition of penalty, procedure of assessment, entire appellate, revisional and rectificatory process, depending on context in which said term is used. What is true scope and connotation of 'assessment under Chapter IV', was considered by their Lordships of Hon'ble Supreme Court inC.A. Abraham'scase (supra). This is what their Lordships observed : " ...the expression 'assessment' used therein (i.e., Chapter IV) does not merely mean computation of income. expression 'assessment' as has often been said, is used in IT Act with different connotations... review of provisions of Chapter IV of Act sufficiently discloses that word 'assessment' has been used in its widest connotation in that Chapter. title of Chapter is 'Deductions and Assessment'. section which deals with assessment merely as computation of income is s. 23 ; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and procedure in that behalf. Sec. 18A deals with advance payment of tax and imposition of penalties for failure to carry out provisions therein. Sec. 23A deals with power to assess individual members of certain companies on income deemed to have been distributed as dividend, s. 23B deals with assessment in case of departure from taxable territories, s. 24B deals with collection of tax out of estate of deceased persons, s. 25 deals with assessment in case of discontinued business, s. 25A with assessment after partition of HUFs and ss. 29, 31, 33 and 35 deal with issue of demand notices and filing of appeals and for reviewing assessment and s. 34 deals with assessment of incomes which have escaped assessment. expression 'assessment' used in these sections is not used merely in sense of computation of income and there is in our judgment no ground for holding that when by s. 44, it is declared that partners or members of association shall be jointly and severally liable to assessment, it is only intended to declare liability to computation of income under s. 23 and not to application of procedure for declaration and imposition of tax liability and machinery for enforcement thereof. Nor has expression 'all provisions of Chapter IV shall so far as may be apply to such assessment' restricted content : in terms it says that all provisions of Chapter IV shall apply so far as may be to assessment of firms which have discontinued their business. By s. 28, liability to pay additional tax which is designated penalty is imposed in view of dishonest contumacious conduct of assessee. It is true that this liability arises only if ITO is satisfied about existence of conditions which give him jurisdiction and quantum thereof depends upon circumstances of case. penalty is not uniform and its imposition depends upon exercise of discretion by taxing authorities ;but it is imposed as part of machinery for assessment of tax liability. " (Emphasis, italicised in print supplied)) 1 2 . We have to assign meaning to terms 'tax assessed' etc., in s. 24B(1) in setting of Chapter IV, as explained above by their Lordships. Thus, understood it would mean not only income tax and super tax, but also additional tax by way of penalty. This would also be clear from scheme of Chapter VI. This Chapter deals with 'liability in special cases'. There are, in all, five sections under this Chapter. Sec. 40 deals with assessment of 'guardians, trustees and agents', s. 41 with 'Court of Wards etc.', ss. 42 and 43 with agent of non-resident and s. 44 with 'liability in case of firm or association discontinued or dissolved'. Sec. 40 and 41 spell out liability by using,inter alia, following phraseology : 'The tax shall be levied upon and recoverable from...' Sec. 44 also used similar language inC.A. Abraham'scase (supra) "...a partner of such firm,... shallin respect of income, profits and gainsof firm... be jointly and severallyliable to assessmentunder Chapter IV and for theamount of tax payable.... " (Emphasis, italicised in print supplied) In none of above sections word 'penalty' has been separately used and yet charging of penalty is justified for reasons explained by their Lordships inC. A. Abraham'scase (supra). Charging of penalty is part of 'assessment' and is covered by term 'tax' for penalty for purpose of effectuating these sections is additional tax. 13 . above view of scheme of Act was again reiterated by their Lordships of Hon'ble Supreme Court inBhikaji Dababhai'scase (supra). Their Lordships were interpreting in, that case sub-s. (1) of s. 13 of Finance Act, 1950 which saved law relating to income tax or super tax, which was in force in any Part B State before 1st April, 1950" for purposes of levy, assessment and collection of income tax and super tax" (Emphasis, italicised in print supplied). There was no reference to 'penalty' in aforesaid sub-section. Interpreting above sub-section, Hon'ble Andhra Pradesh High Court expressed view : " ...that word 'assessment' in s. 13 (1) included whole procedure for imposing liability upon taxpayer butnot to procedure for imposing penalty. They thought that Hyderabad IT Act dealt with liability to pay income tax and penalty in distinct provisions, both relating to imposition and recovery and that if legislature had intended to keep alive Hyderabad IT Act for all purposes including levy of penalty with respect to any particular year or years of assessment, it could have said so in terms clear and unambiguous instead of limiting operation only to 'levy, assessment and collection' (of income tax and super tax). In view of High Court,imposition of penalty was not necessary concomitant or incident of process of assessment, levy and collection of tax. High Court proceeded upon view that by saving Hyderabad IT Act for purposes of levy, assessment and collection of income tax, entire procedure for imposing liability to pay tax and for collection of tax was saved,but penalty not being tax, provisions relating to imposition of and collection of penalty did not survive repeal of Hyderabad IT Act. " (Emphasis, italicised in print supplied) 14. above view was in terms negatived by their Lordships when they explained correct position in law as follows : " This Courtregarded penalty as additional tax imposed upon personin view of his dishonest or contumacious conduct. It is true that under Hyderabad IT Act, distinct provisions are made for recovery of tax due and penalty, but that in our judgment does not alter true character of penalty imposed under two Acts... We are of view High Court erred in holding that proceedings for imposing penalty could not be continued after enactment of s. 13 (1) of Finance Act, 1950. " (Emphasis, italicised in print supplied) 15. In this view of law, and taking into account scheme of 1922 Act, it has to be held that procedure of assessment of tax in case of deceased person would include imposition of penalty also, for penalty, as their Lordships have explained, is additional tax for purpose of 'assessment' under Chapter IV of Act. 16. scheme of s. 24B(1) was considered by their Lordships of Hon'ble Supreme Court inE. Alfred'scase (supra). This is what their Lordships said : " ...Sub-s. (1) of s. 24B makes,inter alia, legal representative liable to pay out of estate of deceased person to extent to which estate is capable of meeting charge, tax assessed as payable by such person or any tax which would have been payable by him under Act, if he had not died. By this sub-section, legal representative as made liable to pay tax which might have been assessed after his death. It covers all situations and contingencies, and makes liability absolute, limited, however, to extent to which estate of deceased is capable of meeting charge. sub- section does not provide for issue of notices, assessment, collection or anything section does not provide for issue of notices, assessment, collection or anything connected with imposition, levy and collection of tax... " It is clear from above enunciation of law that two terms used in s. 24B(1), namely, (i) 'tax assessed' and (ii) 'tax which would have been payable by him, if he had not died' cover two different situations. first term,prima facie, means 'tax' (including penalty) already assessed before death. second term takes into account liability to tax in respect of income of deceased, which could not be determined during his lifetime, but which was payable by him and would have been pressed against him if he had not died. liability in this regard has to be ascertained by proceeding against legal heir and procedure for doing so is given in sub-ss. (2) and (3) of s. 24B. word 'tax' in second term would also include 'penalty' for reasons given above, and as such what can be levied upon and recovered from legal representative is not only income tax and super tax, but also penalty which would have been payable by deceased, if he had not died. Due to absence of definition of 'tax' in Act and definition of said terms through case law referred to above, term 'tax' includes 'penalty' as seen above. 17. It would, in my opinion, be wrong to refer to scheme of IT Act, 1961, and say on basis thereof that penalty on legal representative could not be imposed under s. 24B of 1922 Act, because scheme of 1922 Act is not same as that of 1961 Act. scheme of two Acts and arrangement of sections therein are different and so different interpretations arising from difference in arrangement are bound to arise. provisions relating to assessment of legal representative appear under new Act under Chapter IV dealing with liability in special cases. This Chapter is similar to Chapter V of 1922 Act. Under 1922 Act also, in each of sections appearing under Chapter V, legislature had used following terminology : ' ...and all provisions of this Act shall apply, accordingly.' (See ss. 40 and 41) 'All provisions of Chapter IV shall, so far as may be, apply to any such assessment.' (See s. 44) But for use of above phraseology, provisions of Act dealing with assessment, collection, etc., would not be imported into appearing under Chapter V. Similar scheme had to be followed in respect of s. 159 of 1961 Act, once it was kept in Chapter XV rather than in Chapter XIV. Then, under 1961 Act, provisions pertaining to penalty also do not appear under Chapter XIV. They appear in Chapter XXI. Once scheme of 1961 Act makes above departures from that of 1922 Act, it would not at all be correct to interpret scheme of 1922 Act in light of 1961 Act. On account of placement of s. 159 in Chapter XV, it had to be provided that all provisions of this Act shall apply, accordingly. Similar phraseology was used under 1922 Act in respect of sections similarly placed in Chapter V of said Act as seen above. absence of such phraseology in s. 24B would not give rise to inference that may be permissible to draw under 1961 Act. Sec. 24B under 1922 Act was part of Chapter IV and its scope has to be interpreted as per decision of their Lordships of Hon'ble Supreme Court inC.A. Abraham'scase (supra) as discussed above. 18. Under WT Act also, s. 19 appears under Chapter V dealing with 'liability to assessment in special cases'. Its placement, therefore, necessitated importing into s. 19 of relevant provisions of Chapter IV dealing with assessment. It was done through sub-s. (3) of s. 19. While importing relevant sections of Chapter IV into s. 19, legislature decided in its wisdom to import ss. 14, 15 and 17 of said Chapter only and not s. 18. When this was so, s. 18 could not be made applicable while making assessment under s. 19. case law on Wealth tax provisions cannot, therefore, be of any help in interpreting s. 24B of 1922 Act for arrangement and scheme of said Act is different from that of 1922 Act. 19. In view of this, it was wrong on part of learned CIT (A) to hold, on basis of case law based on s. 19 of 1957 Act that penalty could not be imposed on legal representative under 1922 Act. No case law under 1922 Act has been brought to our attention where such statement of law might have been upheld. If at all, there are decisions, though on different facts, which hold that penalty can be imposed on legal representative inE. Alfred'scase (supra) andSukumar Mukherjee vs. CIT (1958) 33 ITR 231 (Cal)under 1922 Act. In fact, inSukumar Mukherjee'scase (supra), plea was taken before their Lordships of Hon'ble Calcutta High Court that s. 24B only provided that ITO may assess total income of deceased person and that above power of ITO was limited to making assessment only and did not extend to imposition of penalty. above contention was negatived by their Lordships by pointing out,inter alia, as follows : " ...in my view, argument is misconceived Whether or not ITO would have jurisdiction to institute proceedings for imposition of penalty on assessee in particular case, is not to be found in sections which provide for making of assessments. No provision for imposing penalty occurs in s. 24B(2), because it is not concern of section to make any provision in that behalf. I have only to call attention to provisions of s. 23 which deals with assessment in normal case. No one will contend that if person is called upon to make return in respect of what is indisputably his income and he commits one of faults or defaults mentioned in s. 28, proceedings for imposition of penalty cannot be instituted against him. But it will be found that neither s. 23(1) nor s. 23(3) nor s. 23(4) all of which say that ITO shall assess total income of assessee or shall make assessment, says anything at all with regard to imposition of penalty. Sec. 24B(2) also is concerned only with providing for making of assessment in cases where assessee concerned is no longer available for being proceeded against, being dead. It is no more concern of s. 24B(2) to provide for imposition of penalty than it is concern of s. 23(1) or 23(3) or 23(4). Whether or not proceedings for imposition of penalty can be instituted in given case must be ascertained from terms of s. 28 itself. They are not to be sought in sections providing for making of assessments and, therefore, not to be sought either in s. 23(1) or in s. 23(3) or in s. 23(4) or s. 24B(2). argument, that since s. 24B(2) says only that ITO may proceed to assess total income of deceased assessee, therefore, power to institute proceedings under s. 28 and to impose penalty is excluded is not, in my view, tenable argument at all. " 20. Taking into account above discussion, I am of opinion that there is nothing in scheme of 1922 Act, which may be read to bar imposition of penalty on legal representative of deceased representative in respect of penalty on legal representative of deceased representative in respect of default committed by deceased person. One, who is being penalised is not legal representative but deceased, whose representative is assessedquahim. As has been explained above bySalmond on Jurisprudence(referred to above). "This representative bears person of deceased... Inheritance is in some short legal and fictitious continuation of personality of dead man... rights which dead man can no longer own or exercise inpropria personaand obligations which he can no longer inpropria personafulfil, he owns exercises and fulfils in person of living substitute ". imposition of penalty on legal representative is, in fact, on dead person through him and his liability to pay, it is to extent of estate of deceased and no more. There is, therefore, no personal loss to legal representative on account of determination of tax (including penalty), 'which would have been payable by him under this Act if he had not died', and asking him to pay it to extent of his estate. 21. In view of what I have said above, I reverse order of learned CIT (A) and restore that of ITO. *** INCOME TAX OFFICER v. S.P. JAIN