1976 (9) TMI 33 - HC - Income Tax

Issues Involved:
1. Whether penalty under section 60(1)(c) of the Estate Duty Act, 1953, can be imposed for non-inclusion of property deemed to pass under section 12 of the Act.

Issue-wise Detailed Analysis:

1. Penalty under Section 60(1)(c) for Non-Inclusion of Property Deemed to Pass under Section 12:

The court examined whether the penalty under section 60(1)(c) of the Estate Duty Act, 1953, could be imposed on the accountable person for not including the property deemed to pass under section 12 of the Act in the estate duty return.

Facts and Proceedings:
- Smt. Lakshmi Bai passed away on October 19, 1966. The accountable person, Shri Gowrishankar Damani, filed the estate duty return on June 15, 1967, declaring net movables worth Rs. 77,393.
- The Assistant Controller of Estate Duty discovered that the deceased had a settled property at No. 98, Mint Street, Madras, with a reserved interest, making section 12 of the Act applicable.
- The assessment was completed on July 29, 1967, with a principal value of Rs. 1,51,593, including the settled property.
- The Assistant Controller issued a notice under section 60(2) of the Act, alleging concealment of the settled property's value, and imposed a penalty of Rs. 3,000 under section 60(1)(c).
- The Appellate Controller reduced the penalty to Rs. 1,500, but the Income-tax Appellate Tribunal later ruled that no penalty was applicable.

Tribunal's Reasoning:
- The Tribunal considered two points:
1. Whether penalty is exigible for an asset deemed under section 12.
2. Whether a bona fide difference of opinion regarding the asset's includibility could lead to concealment under section 60(1)(c).
- The Tribunal concluded that penalty was not exigible for deemed assets and favored the accountable person on both points.

Court's Analysis:
- The court found the Tribunal's reasoning on the difference of opinion unconvincing, stating that a difference of opinion between the accountable person and the assessing officer does not establish bona fides.
- However, the court agreed with the Tribunal's construction of section 12, noting that it creates a legal fiction that the property, though settled, is deemed to pass on the settlor's death.
- Section 60(1)(c) penalizes concealment of "the property of the deceased," not property deemed to pass under section 12.
- The court drew an analogy with section 28(1)(c) of the Indian Income-tax Act, 1922, which penalizes concealment of "his income" and not income deemed to be included under specific provisions like section 16(3).

Conclusion:
- The court held that section 60(1)(c) does not apply to property deemed to pass under section 12, as it is not "the property of the deceased."
- The accountable person's failure to include such property in the return does not attract penalty under section 60(1)(c).
- The court affirmed the Tribunal's decision and ruled in favor of the accountable person, awarding costs to be paid by the Controller of Estate Duty, Madras.

Final Judgment:
- The question referred to the court was answered in the affirmative, confirming that the Tribunal was correct in holding that no penalty could be imposed under section 60(1)(c) of the Estate Duty Act, 1953, for non-inclusion of property deemed to pass under section 12.
- Costs were awarded to the accountable person, with counsel's fee fixed at Rs. 500.

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