2016 (12) TMI 1401 - AT - Income Tax

Appeal allowed, penalty deleted for legal heir. Judgment questions basis for penalty imposition on wife.

Smt. Nirmala S. Tilavalli, L/H. Late Shri. S.H. Tilavalli Versus Income Tax Officer, Ward 1 (3), Hubballi

The ITAT allowed the appeal, directing the deletion of the penalty imposed on the legal heir. The judgment emphasized the absence of deliberate ... Penalty under section 271(1)(c) - whether deceased deliberately concealing the income or filing the inaccurate particulars of the income - Held that:- 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. - Decided in favour of assessee. Issues Involved:Appeal against penalty under section 271(1)(c) of the Income Tax Act based on alleged concealment of income by the deceased assessee's legal heir.Analysis:Issue 1: Imposition of Penalty by AO and Confirmation by CIT(A)The AO imposed a penalty under section 271(1)(c) of the Income Tax Act on the wife of the deceased assessee for allegedly concealing information about the Savings Bank Account held by her husband. The AO concluded that the legal heir was aware of the account's existence based on post-death transactions. The CIT(A) upheld the penalty, emphasizing the willful concealment by the legal heir, leading to the establishment of mens rea. The wife contended that she was unaware of the account and disclosed the cash deposit only after receiving a notice. However, both the AO and CIT(A) found her explanation inadequate, resulting in the penalty confirmation.Issue 2: Lack of Representation and Proceedings Before ITATDuring the ITAT proceedings, the appellant, the legal heir, did not have a representative present. Consequently, the ITAT decided the appeal based on available records. The Departmental Representative argued for penalty confirmation, highlighting post-death deposits by family members into the deceased's bank account. The ITAT considered the absence of deliberate concealment by the deceased and questioned the basis for imposing a penalty solely on the wife.Issue 3: Assessment Proceedings and Penalty ImpositionThe assessment proceedings initiated post-death of the assessee led to the penalty imposition on the legal heir. The ITAT observed that the deposited amount did not belong to the deceased and could not be attributed to deliberate concealment. The assessment order incorrectly attributed the deposits to the deceased, forming the basis for penalty proceedings. The ITAT emphasized the lack of evidence linking the deposits to the legal heirs and highlighted the absence of willful concealment by the appellant.Conclusion:The ITAT allowed the appeal, directing the deletion of the penalty imposed on the legal heir. The judgment emphasized the absence of deliberate concealment by the deceased or the legal heir, questioning the basis for penalty imposition solely on the wife. The ITAT's decision focused on the lack of evidence connecting the deposits to the legal heirs and the absence of mens rea, leading to the penalty's deletion.