TMI Blog2007 (3) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlements with the Department. In fact the demands of income-tax were raised based on settlement and according to counsel for the petitioner, the total tax payment exceeds total tax liability and the petitioner and other legal heirs of the late assessee are entitled to refund. However, penalty levied for the above three years and confirmed in revisions is still outstanding. I have heard senior counsel Sri V. Ramachandran who appeared for the petitioner along with Sri Harun-al-Rashid and Sri P. K. R. Menon, senior standing counsel appearing for the respondents. Both sides have furnished the argument notes and I have gone through the same also. The main ground of challenge against levy of penalty is that it is against the settlement arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al heirs thereafter failed to settle the arrears of tax in terms of the settlement but made payments only after decades of the settlement and that too in coercive proceedings. The next ground of challenge is that the assessee was sick and bedridden and consequently he was not in a position to receive notice and effectively represent against levy of penalty. On the facts, the Commissioner clearly found that penalty was levied after issuing detailed notice and after giving opportunity to the late assessee. I do not think the petitioner as a legal heir is entitled to contest penalty on the ground that the assessee was not heard which case the assessee did not have during his lifetime. In fact, on going through the penalty orders, I find pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the merits of the case. Senior counsel for the petitioner pointed out that the onus of proof of concealment of income is on the Department and until amendment was introduced in the 1961 Act in section 271(1)(c) of the Act, no penalty could be levied under section 41(1)(c) of the Travancore Income-tax Act or section 28(1)(c) of the Indian Income-tax Act, 1922 without establishing mens rea. He has relied on the decisions of the Supreme Court in Anantharam Veerasinghaiah and Co. v. CIT [1980] 123 ITR 457, CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369 and CIT v. Anwar Ali [1970] 76 ITR 696 and contended that without establishing mens rea, the Department is not entitled to levy penalty for concealment of income whether it be under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal heirs failed to settle the liability in terms of the settlement. Therefore I do not find any ground to interfere with the penalty levied for 1950-51. For the year 1951-52 (1123 ME) the late assessee returned income of Rs. 34,236 and the original assessment completed was on an income of Rs. 91,242. The assessment was revised under section 47 of the Travancore Income-tax Act because the assessee did not include his share income from a private limited company under his control, that is M/s. A. Thangal Kunju Musaliar and Sons (P) Ltd. On reassessment, the income was redetermined at Rs. 3,30,175 which was confirmed in appeal by the Tribunal. The assessment was ultimately settled at enhanced income of Rs. 10,22,339. In view of massive conceal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erwise run into lakhs of rupees for nonpayment of penalty for several decades. However such relief can be granted as in settlement only if the petitioner and other legal heirs of the assessee pay the penalty within a reasonable time. Even though along with the argument notes the petitioner has produced an order of the Chief Commissioner dated January 5, 2000, waiving interest under section 220(2A) of the Act on the penalty amount, it is conceded that the petitioner has not paid penalty and consequently waiver of interest is not relevant or valid as of now. In any case in order to give quietus to the issue, which is pending for decades, I order complete waiver of interest if the entire arrears of penalty are paid at least on or before April ..... X X X X Extracts X X X X X X X X Extracts X X X X
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