TMI Blog2013 (10) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee - 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. Reliance has been placed upon the judgment of Hon’ble Apex court in the case of Hindustan Steel Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court], wherein it has been held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was on the dead person, late Shri Chandrakant A. Gandhi. He submitted that the fact that the assessee has expired was brought to the notice of the AO time and again, and still the AO passed penalty order in the name of dead assessee. He referred to the show cause notice issued by the AO dated 1.3.2011 in the name of the dead assessee. He referred to the copy of the rectification application dated 17.2.2011 filed by the son of the deceased assessee with the AO intimating that the assessee, Shri Chandrakant A. Gandhi has expired. He submitted that law is settled on this issue that the penalty imposed on dead person is null and void. The learned DR has opposed the submissions of the learned counsel for the assessee. He submitted that not mentioning the name of son of late assessee as legal heir of his father is merely a clerical and typographic mistake, which does not render the order imposing the penalty as null and void. He submitted that the AO has allowed opportunity of hearing to the assessee, and that the clerical error has not resulted in any adverse effect on the proceedings within the meaning of section 292B of the Act. He relied on the following decisions:- i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal heir of the deceased assessee on record, was passed by the AO, even in the order sheet maintained by him, and intimated to the legal heir of the assessee. The facts of the case before us are clearly at variance with the facts of the case before the Hon'ble High Court. In the case before the Hon'ble High Court, during the pendency of the assessment proceedings, the widow of the deceased assessee was impleaded as a legal heir, and thereafter, a finding has been recorded that the ITO followed the procedure correctly as provided by section 159 and completed the proceedings. The Hon'ble Court found that title of the order, which was not happily worded, would not make the assessment order invalid. In the case before the Hon'ble High Court, it was specifically recorded by the Hon'ble High Court that the order was not passed on the dead person, but on the legal heir of the deceased. No such facts are present in the case before us. There is nothing on record to suggest that at any point of time, during the pendency of penalty proceedings, the legal heir of the deceased assessee was impleaded and brought on record. We find that in the facts of the case of the assessee, the decision of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceased person itself, and the penalty proceedings under section 271(1)(c) of the Act were initiated against the legal heir, Smt. Tapati Pal, and therefore, in our view, the facts of this case are in total variance with the facts of the case before us. 7. In the case of ACIT Vs. Nageshwar Prasad (supra), relied upon by the ld. DR, the issue was that whether the penalty proceedings can validly be initiated and penalty can be levied on legal heirs when return of income was filed by the deceased during his life time, and when inaccurate particulars as to his income were furnished by the deceased in the said return. We find that in this case, before ITAT, Patna Bench, the penalty proceedings were initiated and penalty was levied on the legal heirs, and therefore, the Tribunal found that there is no infirmity in the order imposing penalty, although, the original return of income was filed by the deceased. In the case before us, penalty proceedings were never initiated or penalty levied on the legal heirs of the deceased, and in fact, the legal heirs were not brought on record by the AO before levy of impugned penalty. The facts of the case of the assessee before us are entirely diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has grievously erred in holding that the appellant had committed default u/s.158BFA(2) and thereby levied penalty of Rs.9,04,473/-" 10. The learned counsel for the assessee submitted that even on merits of the case, the assessee is not liable to penalty as only source of income of the assessee is agriculture, assessed by the department over number of years, year after year, and no other source of income can be established by the department. Accordingly, even if the some deposit is found to be not satisfactorily explained by the assessee, the same could not be assessed as undisclosed income of the assessee. He submitted that ITAT, Ahmedabad in the quantum appeal of the assessee has allowed only the credit of its agricultural income declared in the income-tax return for the block period, and credit of earlier years (prior to block period) income was not allowed to the assessee. He submitted that ITAT has directed the AO to compute undisclosed income by taking the figure of savings from agricultural income at 40% for some years, 60% for some other years and 80% in succeeding years. He submitted that the basis of determining the saving figures of the assessee for the block perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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