INCOME TAX OFFICER v. BIBHUTI MISHRA
[Citation -1985-LL-0111-3]

Citation 1985-LL-0111-3
Appellant Name INCOME TAX OFFICER
Respondent Name BIBHUTI MISHRA
Court ITAT
Relevant Act Income-tax
Date of Order 11/01/1985
Assessment Year 1978-79
Judgment View Judgment
Keyword Tags principles of natural justice • concealment of income • imposition of penalty • legal representative • bona fide belief • fresh assessment • interest income • dead person
Bot Summary: The facts in this case were that the assessee did not show the income of his wife in his return in the bona fide that it was not his income and he was not obliged to show the same in his return. Their Lordships of the Patna High Court held in that case as under: Where the assessee bona fide believes that he is not required to include the income of his wife in his return of income and if the assessee succeeds in showing that he bona fide believed that he is not required to show that income in his return, he succeeds in proving the absence of fraud. Where it is still controversial whether such income has or has not to be included in his return, he has also succeeded in proving absence of gross or wilful to negligence. The finding that the failure to disclose the entire income or to furnish full particulars of the income was due to a bona fide belief of the assessee, not attributable to any gross or wilful negligence, that the income omitted to be included was not an income which had to be included in his return, precludes a finding that he had deliberately concealed that income or furnished inaccurate particulars of his income as a result of fraud or gross or wilful neglect. The Departmental Representative argued that the assessee did not show this income in the return originally filed. Thereafter a revised return was filed but in this return also the income from interest in the name of his grandson was not shown. The income was taxable in his hands only by a fiction of law and it was not his actual income.


B. NATH, A.M.: This is Department appeal against order of AAC cancelling levy of penalty under s. 271(1)(c) for alleged concealment. ITO levied penalty under s. 271(1)(c) on Shri Bibhuti Mishra who died on 4th April, 1981 and penalty order was passed after death of late Shri Babhuti Mishra in October, 1981. Thus ITO levied penalty on added person in penalty order no reference was made that Shri Bibhuti Mishra had died. Further no show cause notice was issued in name of legal representative before levy of penalty in question. penalty thus levied on dead person without issuing any show cause notice to legal representative was obviously invalid order. authorised representative stated Departmental appeal is liable to be dismissed only on this preliminary ground. In this connection authorised representative relied upon following case laws: (1) Shaikh Abdual Kadar vs. ITO (1958) 34 ITR 451 (MP) In this case it was held by their Lordships of Madhya Pradesh High Court that notice which was issued in name of person who was know to be dead, was purposeless and defective and taxing authority cannot make any living person into whose hands notice went liable and attribute notice to him. (2) Jai Prakash Singh vs. CIT 1977 CTR (Gau) 232: (1978) 111 ITR 507 (Gau) In this case their Lordships of Gauthati High Court held as under: "Violation of statutory principles of natural justice, takes away jurisdiction of authority concerned to continue with proceedings and pass orders and necessarily invalidates proceedings and orders passed therein. If estate of deceased assessee is to be assessed to income-tax, estate must be fully represented by impleading all legal representatives and serving notices under s. 143(2) on all of them who represent entire estate. If this were not done, assessment proceedings and assessment orders passed therein would cased to be valid proceedings and valid orders in eye of law. In such case it is legal duty of AAC and Tribunal t o annul assessment. After annulment of assessment order, if law permits and there is no bar under limitation prescribed by law, fresh assessment proceedings may be drawn up in appropriate cases. But appellate authorities cannot nullify provisions of limitation for assessment, as laid down in s. 153, by passing order setting aside assessments and directing completion of assessment by issuing notice on remaining legal representative." Departmental Representative argued in connection with above legal argument that even though no notice was issued to legal representative s. 159(2)(a) authorises Department to continue proceeding taken against t h e deceased and against legal representative after his death, and proceeding taken against deceased before his death shall be deemed to have been taken against legal representative. It was thus argued that even though no show cause notice was issued to legal representative and penalty order was passed on dead person order was valid. We have considered arguments of both sides. In our opinion, no penalty can be levied on dead person. legal representative could not be liable without issue of any show cause notice to him. Respectfully following decided cases mentioned above we hold that penalty order was null and void. It was argued by authorised representative that even on merits there w s no case for levy of penalty under s. 271(1)(c). It was stated that deceased late Shri Bibhuti Mishra was very old man of 77 years when he had filed return for this year and either he forgot or he did not know that interest income arising to his grandson on account of gifts made by him were includible in his total income and as such he should show said amount in his return. Further it was stated that this became taxable in hands of assessee only by virtue of amendment made which was given effect from asst. yr. 1977-78 only (only one year before under consideration). It was thus argued that late assessee was held liable for concealment of income which was not his but of his grandson. He was expected to show that income by deemed fiction of law. assessee was very old person and he did not know all these legal complication and he was not aware of this amendment. Further when he became aware he filed revised return on his own showing this income. It was thus argued that it was not fit case at all for levy of penalty and AAC has correctly cancelled penalty. Reliance was placed in this connection on decision of their Lordships of Patna High Court in case of CIT vs. P. A. Patel (1981) 127 ITR 390 (Pat). facts in this case were that assessee did not show income of his wife in his return in bona fide that it was not his income and he was not obliged to show same in his return. Their Lordships of Patna High Court held in that case as under: "Where assessee bona fide believes that he is not required to include income of his wife in his return of income and if assessee succeeds in showing that he bona fide believed that he is not required to show that income in his return, he succeeds in proving absence of fraud. Where it is still controversial whether such income has or has not to be included in his return, he has also succeeded in proving absence of gross or wilful to negligence. finding that failure to disclose entire income or to furnish full particulars of income was due to bona fide belief of assessee, not attributable to any gross or wilful negligence, that income omitted to be included was not income which had to be included in his return, precludes finding that he had deliberately concealed that income or furnished inaccurate particulars of his income as result of fraud or gross or wilful neglect. imposition of penalty under s. 271(1)(c) of Act, in such circumstances, would not be valid." It was thus argued that in identical facts their Lordships of Patna High Court held that levy of penalty under s. 271(1)(c) was not valid. Departmental Representative argued that assessee did not show this income in return originally filed. Thereafter revised return originally filed. Thereafter revised return was filed but in this return also income from interest in name of his grandson was not shown. When details of bank account were called for assessee filed another revised return in which said interest was declared. It was thus argued that assessee had shown this amount in second revised return, when bank statements were called for. It was thus argued that assessee purposely did not show income in earlier two returns and is correctly liable to levy of penalty for concealment. We have considered rival arguments and facts of case. We have already held above that order levying penalty was null and void legally as penalty was levied on dead person and no show cause notice was issued to legal representative. Further we are also of opinion that even on facts it was not fit case for levy of penalty under s. 271(1)(c). assessee was very old person. income was taxable in his hands only by fiction of law and it was not his actual income. fiction of law was applicable by virtues of amendment made only one year back. It can reasonably be held that assessee may not have been aware of said amendment. decision of their Lordships of Patna High Court (supra) is wholly in favour of assessee. Respectfully following said decision we hold that levy of patently was not correct even on facts. As per reason mentioned above, appeal of Department is dismissed. *** INCOME TAX OFFICER v. BIBHUTI MISHRA
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