TMI Blog1991 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... orders that if the contentions regarding filing of the application under section 146 is correct and the ITO has not passed any order in that regard then the application would be deemed to have been accepted and the penalties imposed automatically become redundant. 3. The ground in the appeal by the revenue is that the DC(Appeals) erred in holding that the assessee filed petition under section 146 and thereby cancelled the penalties levied by the ITO. In order to decide the appeal it is necessary to cull out the facts of the case. The assessee is a minor and her father and natural guardian, Sri Narendra Bajoria filed a return of income of Rs. 5,525 from business. The ITO fixed the case for hearing on 14-1-1983, but since there was no compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(b), Rs. 1,113 under section 273 and Rs. 14,840 under section 271(1)(c). These are the three penalty orders which have been cancelled by the DC(Appeals) as mentioned above against which the department is in appeal before us. 6. The learned departmental representative arguing for the revenue stated that the application made under section 146 is not on the file of the ITO and no order has been passed thereon. Therefore, it cannot be deemed or assumed that the assessment order made on 14-1-1983 ceased to exist and the penalties became redundant as has been held by the DC(Appeals). He further submits that the DC(Appeals) has not verified the records at all and has unjustifiably stated that no reasonable opportunity was given. It is, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that since the assessment trade by the ITO was protective and not substantive assessment then it lawfully follows that whatever income declared by the assessee is not considered as her but of some other person then in such an event until a final decision is arrived at as to who is the real earner of the income or investment, till then the assessee is not liable for tax nor exigible for any of the penalties more particularly penalties levied under sections 273 and 271(1)(c). It is also submitted by the assessee's counsel that the DC(Appeals) was correct in holding that there has been no reasonable opportunity given as laid down under section 274 before levy of penalties and, therefore, no interference is called for in the peculiar fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer made therein granted resulting in cancellation of the assessment made on 14-1-1983. Therefore, when the assessment made on 14-1-1983 stood cancelled and order had become non-existent and non est then the assessee can not be visited with the penalties initiated during the course of such assessment proceeding and the penalties levied are, therefore, illegal and liable to be quashed. 8. Looking from another angle also the penalties cannot survive, for the reason that the ITO made the assessment on the assessee on a protective basis though the return was filed by her through her guardian claiming declared income to be her income. The finding given by the ITO in that protective assessment is that the income and investment made is not the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings, the competent authority has to probe into and decide whether there has been any concealment of income. But, where there is a dispute as to whether such income allegedly concealed would be assessed in the hands of X or Y unless the determination is made by the Income-tax Officer, no charge of concealment can be made against the person in whose hands the income is added on protective basis. He is liable only if it is his income which has been concealed. In other words, a person upon whom a substantive assessment is made would only be liable for penalty provided the conditions precedent for the imposition of the penalty are satisfied. " The Gauhati High Court has also held in the case of Metal Stores v. CIT [1990] 89 CTR (Gauha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
