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TMI Blog1983 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) vide his order dated 18-1-1983 and he has finally reduced the taxable income to only Rs. 59,700. 3. The ITO also initiated penalty proceedings under various sections of the Act including section 271(1)(a). A show-cause notice was issued to the assessee to which there was also a reply on 27-2-1981. It was stated in the said reply that the books of account and the details were seized by the department and, therefore, the assessee was not in a position to file the return of income until and unless those books were returned. The reply further states that it was after great efforts that a return of income was filed and, therefore, the delay in the submission of the return was because of a reasonable cause. The ITO, however, rejected th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed on him as an individual. He also accepted that a notice of demand in Form No. 7 had also been issued for the above penalty to Shri Jangi Lal, son of Shri Sita Ram as an individual. His submission, however, was that these mistakes or defects did not affect the validity of the penalty proceedings in view of the provisions contained in section 292B of the Act introduced in the Act with effect from 1-10-1975 by the Taxation Laws (Amendment) Act, 1975. He pointed out that the decision of the Allahabad High Court in the case of Lalit Mohan was rendered on 15-2-1974 and, therefore, it had no occasion to consider the implication of section 292B, which was brought on the statute only subsequently with effect from 1-10-1975. In this connection, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual. He argued that there was no doubt and, in fact, it was also the case of the department that Shri Jangi Lal had not committed any default in furnishing the return late and, therefore, he was rightly exonerated from the levy of the penalty by the Commissioner (Appeals). He also referred to the decision of the Supreme Court in CIT v. Ishwar Singh Sons [1981] 131 ITR 480. It was held in this case that an individual and an HUF were absolutely distinct entities in law. He also invited our attention to another decision of the Supreme Court in CIT v. Rameshwarlal Sanwarmal [1971] 82 ITR 628, where also a similar view was taken. 7. We have carefully considered the submissions placed before us. We are conscious of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty was levied must be the same. Since they were not the same persons, the Commissioner (Appeals) had no alternative but to cancel the penalty as Shri Jangi Lal as an individual could not be subjected to it. 8. A careful consideration of the facts stated above clearly goes to show that the Commissioner (Appeals) was absolutely correct in his approach. He exonerated a person from the levy of a penalty, which could not and had not been validly levied on him. We do not think that section 292B can be of any assistance to the department in such a situation. The principle as laid down by the Supreme Court in the case of Ishwar Singh Sons that the individual and the HUF are two distinct entities is unassailable and cannot be ignored by rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r opinion, can be covered by section 292B. In fact, we do not consider it a defect at all. In the second place, such an order can also not be called in conformity with or according to the intent and purpose of the Act. To us, the position is quite clear. To repeat the assessment was made on the HUF, while the penalty was imposed on a different entity. The penalty had, therefore, to be cancelled as the entity which was subjected to it was not found guilty of any default. If the ITO still considers that the HUF was guilty of any default, it is for him to proceed against it in accordance with law and not against a different entity not guilty of any default. 10. We also do not think that any of the cases cited by the learned departmental repr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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