Madras H.C : Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that penalty was legally leviable for the asst. yrs. 1968-69 to 1975-76 though the partition of the HUF had taken place on 31st Dec., 1974 ?

High Court Of Madras

V.L. Balakrishna Naidu vs. CIT

Sections 171(8), 271(1)(c)

Asst. Years 1968-69, 1969-70, 1970-71, 1971-72,

1972-73, 1973-74, 1974-75, 1975-76

R. Jayasimha Babu & N.V. Balasubramanian, JJ.

TC Nos. 1157 to 1164 of 1988

15th June, 1998

Counsel Appeared

P.P.S. Janarthana Raja, for the Applicant : C.V. Rajan, for the Respondent

JUDGMENT

N.V. BALASUBRAMANIAN, J. :

At the instance of the assessee, the Tribunal has stated a case and referred the following common question of law in relation to levy of penalty on the assessee for the asst. yrs. 1968-69 to 1975-76 for our consideration :

“Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that penalty was legally leviable for the asst. yrs. 1968-69 to 1975-76 though the partition of the HUF had taken place on 31st Dec., 1974 ?”

There is no dispute that the levy of penalty under s. 271(1)(c) of the IT Act, 1961 (hereinafter to be referred to as ‘the Act’), on the assessee for concealment of income during the asst. yrs. 1968-69 to 1975-76 has become final. The quantum of penalty and the jurisdiction of the ITO to levy penalty has become final by the order of the Tribunal. However, a contention was raised on behalf of the counsel for the assessee that the partition of the assessee’s HUF had taken place on 31st Dec., 1974 and the order recognising the partial partition was passed on 30th Jan., 1979 and hence, the orders of penalty passed on 30th March, 1985, were not valid on the score the penalty was imposed on a defunct HUF. The Tribunal rejected the said contention in view of the provisions of s. 171(8) of the Act. The Tribunal, at the instance of the assessee, has stated a case as the constitutionality of the provisions of s. 171(9) of the Act was considered by this Court and the matter is pending for consideration before the Supreme Court against the decision of this Court. We are of the view that on a plain reading of s. 171(8) of the Act, the provisions of s. 171(8) apply both inrelation to the levy as well as to collection of any penalty in respect of any period up to the date of the partition, whether total or partial, of an HUF. In this case, the partition took place on 31st Dec., 1974, and the order recognising the partial partition was passed on 30th Jan., 1979, and, therefore, the levy of penalty related to the period prior to the date of partition and the ITO was justified in levying the penalty though on the date he passed the order, the family had ceased to exist by virtue of the partition. His action on levying the penalty is justifiable on the plain terms of s. 171(8) of the Act. We, therefore, hold that the Tribunal was justified in its view that the penalty levied was legally correct. Accordingly, we answer the common question of law referred to us in the affirmative and against the assessee. The Revenue will be entitled to costs in the sum of Rs. 1,000 one set.

[Citation : 246 ITR 186]

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