Case Law Details
Penalty imposed on legal heir without imp leading as legal heir of the deceased not sustainable
In the case before us, the legal heir was never imp leaded or brought on record. The show cause notice for penalty was not issued, as legal heir of the deceased, and therefore, it cannot be said that non-mentioning of the name of the legal heir and writing of name of the deceased at the top of the penalty order is merely a clerical error. In our considered view, where legal heirs of the deceased was brought on record and was imp leaded in the proceedings as legal heir, and only mistake is in writing of the name of the deceased on the top of the order passed by the AO, the same shall be simply a clerical error and shall have no adverse effect on the proceedings within section 292B of the Act. However, if the AO has failed to bring the legal heirs on record and the legal heirs has not been imp leaded, it cannot be said that it is merely a clerical error to be saved by the provision of section 292B of the Act, and such an order passed on the dead person shall be null and void, and has to be quashed. In this case, the facts of the case leaves to only conclusion that the order imposing penalty was passed on the deceased, and therefore, is null and void, and the penalty on the dead person is liable to be cancelled on this ground alone and accordingly, we cancel the penalty levied under section 158BFA(2) of the Act.
Penalty cannot be imposed for Additions based on Estimation or preponderance of probabilities
We have considered rival submissions and have perused the copies of various documents and case laws filed by both the parties. We find that the assessee is liable to succeed on merits of the case also. The assessee has only source of agricultural income, and no other source of income could be established by the department. Accordingly, even if certain part of the assessee’ s explanation with regard to deposits with some financial entity is not proved, since the assessee has only agriculture income, unproved part of the deposits could be arguably claimed to be out of agriculture income only. Moreover, we find that the Tribunal in the quantum appeal of the assessee has allowed the benefit of credit of agriculture income of the assessee relating to the block period only. The claim of the assessee is that the credit for the amount available with the assessee, out of savings from agriculture income of past many years, as on the first date of block period, was not allowed by the Tribunal. We find that in the quantum appeal of the assessee, the Tribunal has directed to take the savings from the agriculture income at 40% for period upto the assessment year 1992-93 and at 60% for the assessment years 1993-94 and 1994-95 and in the subsequent years at 80% of the agricultural income was directed to be taken as savings of agriculture income of the assessee, and the AO was directed to give credit to the assessee accordingly. We find that the total undisclosed income under section 158BD was determined at Rs.36,47,355/- by the AO and after allowing appeal-effect by the ITAT, the same was reduced to Rs. 15,07,455/-. We find that the facts of the case may justify the part of the addition to the extent of Rs. 15,07,455/-, sustained by the Tribunal, but in our view, are not sufficient to justify the imposition of penalty under section 158BFA(2) of the Act. It is well settled now that the assessment proceedings and penalty proceedings are different and independent to each other. The addition or part of the addition could be sustained on the preponderance of probabilities, but in penalty proceeding, some proof is required, to impose penalty on the assessee. We find that the savings of the assessee from agriculture income have been determined by the Tribunal by fixing certain percentage ranging from 40% to 80% for different years involved in the block period, and that is by way of estimation only. In CIT Vs. Dr.Giriraj Agarwal Giri, (2012) 253 CTR (Raj) 109, Hon’ble Rajasthan High Court held that where the additions are based on estimation only, it can be said to be correct and it can be incorrect also, and therefore, the penalty was wrongly imposed by the AO under section 158BFA(2) of the Act and no substantial question of law is involved in the present case.
INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD,
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