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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI A. K. GARODIA & SHRI LALIT KUMAR
The present appeal is arising out of the order of the CIT(A) passed on 25.05.2010 confirming the imposition of penalty levied by AO under section 271(1)(c) of the Act.
The grounds of appeal are as under: 1. The learned CIT(A) erred in passing the order in the manner which he did.
Page 2 of 6 2. The learned CIT(A) ought to have appreciated the explanation offered by the appellant and refrained from confirming the penalty u/s.271(1)(c) of the Act.
3. The learned CIT(A) ought to have appreciated that the Appellant has no information about the SB Account of her husbandsince the said account was operated by her husband and son. Thus, to buy piece with department the Appellant has offered the same and paid the taxes. Accordingly, penalty confirmed is liable to be cancelled.
4. On the facts and in the circumstances, the learned CIT(A) ought to have appreciated the mere acceptance of the addition to buy piece was not adequate to justify the levy of penalty.
Without prejudice, the penalty confirmed by CIT(A) is excessive, arbitrary and unreasonable and liable to be cancelled.
For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.
Briefly, the facts of the case are:
The assessee, Shri. S. H. Tilavalli, had an account in Canara Bank, Hubballi, bearing SB Account No.6788. It was reported by the DR that the assessee had deposited a sum of Rs.13,00,000/- in his account. Accordingly a notice under section 148 was served on the assessee. In pursuance to the notice, the wife of late Shri. S. H. Tilavalli appeared and offered the entire cash deposited to the tax. On the basis of this, the assessment was completed. Thetotal income assessed was Rs.14,34,789/-.
Simultaneously, the AO had also commenced the penalty proceedings under section 271(1)(c) of the Act and gave a notice to the wife of assessee Late Shri. S. H. Tilavalli. It was also the case of the assessee before AO that she has no knowledge about
Page 3 of 6 the account of her husband in Canara Bank and she offered the income for the assessment only with a view to buy peace. The explanation of the assessee was not accepted and the AO has imposed a penalty of Rs.4,43,681/- on the wife of the deceased assessee. The reasoning of the learned AO given in the penalty order is as under:
“The assessee Late Shri.Sharanappa H Tilavalli died on 14.6.2004 as per the letter dated 15.10.2009 issued by the Manager, Canara Bank, Koppikar Road, Hubli. In the letters filed by the assessee in the course of assessment proceedings as well as in connection with the penalty proceedings u/s. 271(1)(c)of the I.T.Act, 1961, she has stated that she was not aware of the Savings Bank Account held by her husband at Canara Bank, Koppikar Road, Hubli. However, it is seen from the statement of account in respect of the Savings Bank Account No.6788, the Savings Bank Account has been operated during the financial year 2004-05 on several occasions even after the death of her husband. Hence, I conclude that Smt. N.S.Tilavalli, Legal heir of Late Shri. Sharanappa H Tilavalli was aware of the Savings Bank Account No. 6788 held at Canara Bank, Koppikar Road, Hubli. I, therefore, conclude that the assessee’s case is a fit case for levy of penalty under section 271(1)(c) of the I.T. Act, 1961. I levy a minimum penalty of Rs.4,43,681/- (Rupees Four Lakh Forty Three Thousand Six Hundred and Eighty One) under section 271(1)(c) of the I.T. Act, 1961.”
Against the said order, the assessee before us filed an appeal 5. and the learned CIT had confirmed the order passed by the AO for the following reasons:
“ The department has information that the assessee Shri Sharnappa H TilavaIIi has deposited the following amounts in his saving banks accounts Canara Bank .during the previous year relevant to AY 2005-06 and the same was not disclosed in the ROI : .
Sl. No. Date Amount Name of the Bank 1 2.9.2004 Rs. 10,00,000/- Canara Bank Hubli (5B A/c) 2 7.3.2005 Rs. 3,00,000/- Canara Bank Hubli (SB A/c) Total Rs. 13,OO,OOO/-
But the assessee’s wife Smt. Nirmala.S.Tilavalli has come out with the argument that she was not aware of the saving bank accounts of her husband in Canara Bank and Smt. Nirmala.S.Tilavalli offered the entire cash deposit of Rs. 13,00,000 which was deposited in saving bank accounts in Canara Bank, Hubballi, only after the AO has issued the notice otherwise the deposit of Saving account should not have surfaced and may be escaped from the tax net. It means that she has willfully concealed the fact of saving bank account No. 6788 in Canara Bank. Hence, the mensrea was established clearly in this case. Hence, the penalty levied by the AO u/s 271(1)(c) is upheld and assessee’s ground of appeal is dismissed.”
6. Now the assessee is before us. We may record that there is no representative on behalf of the assessee during the course of the proceedings before us and therefore we have no other option but to decide the appeal on the basis of the information available on record. The learned DR has submitted that the penalty is required to be confirmed as after the death of the assessee, the family members of the assessee were operating the bank account maintained by late husband of the assessee and were depositing the amount in the account of deceased . The learned DR has submitted that the amount was deposited by the son after the death of the husband of the present appellant. Further learned DR relies upon the orders passed by authorities below.
We have heard the rival contention of the parties and perused record. It is the case of the revenue that the assessee i.e., Shri Sharnappa H Tilavalli died on 14.04.2004 and thereafter the amount was deposited in the account of the said assessee on 02.09.2004 and 07.03.2005 to the tune of Rs.13,00,000/-. Undoubtedly, the amount deposited in the account of the deceased cannot be said to be amount belonging to the deceased Shri Sharnappa H Tilavalli and therefore the said amount cannot be assessed in the hands of Shri Sharnappa H Tilavalli. For the said reasons, even though the assessment has been finalized on the acceptance of the present
Page 5 of 6 appellant before us, the same cannot be formed basis of imposition of penalty. As in our view the deceased cannot be said to be deliberately concealing the income or filing the inaccurate particulars of the income.
Moreover it is the case that the assessment proceedings were initiated pursuant to the notice issued under section 148 to Shri. S. H. Tilavalli. It is also recorded in the assessment order ( wrongly ) that the assessee had deposited the amount of Rs.13,00,000/- in the bank account during the year 2005-06. It is also mentioned in the assessment order that the notice under section 148 was issued and served on the assessee (late Shri. S. H. Tilavalli). Now on the basis of the above said assessment proceedings,the penalty proceedings were concluded.
In our view nothing has been brought on record that deposit was made by the legal heirs of the deceased and more particularly the assessee before us. Besides the above, had the assessee was alive, then the assessee (late husband) would have given details of the income or the status of the amount deposited in the account i.e., whether the amount deposited was a loan, gift or tax exempted deposits, etc. Furthermore, if we accept the case of the learned DR for the revenue that the amount was deposited by the son of the appellant before us, then in our view the explanation should have been sought from the son and if the income belongs to him, then the income should be assessed in the hands of the son and not in the hands of husband or the wife of the deceased. Since there was no willful and deliberate concealment of the income by the assessee therefore the appeal is required to be allowed.
Therefore in our view no case of imposing of penalty was made out by the revenue and in the result the appeal is required to be allowed and we therefore allow the appeal and direct the deletion of penalty imposed on the assessee.
In the result, the appeal filed by the appellant is allowed.
Pronounced in the open court on this 23rd day of December, 2016.