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TMI Blog1991 (11) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... O has not passed any order in that regard then the application would be deemed to have been accepted and the penalties imposed automatically become redundant. 3. The ground in the appeal by the Revenue is that the Dy. CIT(A) erred in holding that the assessee filed petition under s. 146 and thereby cancelled the penalties levied by the ITO. In order to decide the appeal it is necessary to cull out the facts of the case. The assessee is a minor and her father and natural guardian, Sri Narendra Bajoria filed a return of income of Rs. 5,525 from business. The ITO fixed the case for hearing on 14th Jan., 1983, but since there was no compliance he completed the assessment under s. 144. In the assessment order the ITO has stated that since no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled by the Dy. CIT(A) as mentioned above against which the Department is in appeal before us. 6. The learned Departmental Representative arguing for the Revenue stated that the application made under s. 146 is not on the file of the ITO and no order has been passed thereon. Therefore, it cannot be deemed or assumed that the assessment order made on 14th Jan., 1983. ceased to exist and the penalties became redundant as has been held by the Dy. CIT(A). He further submits that the Dy. CIT(A) has not verified the records at all and has unjustifiably stated that no reasonable opportunity was given. It is, therefore, urged by the learned Departmental Representative that the order of the Dy. CIT(A) should not be sustained and penalties impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome declared by the assessee is not considered as her but of some other person then in such an event until a final decision is arrived at as to who is the real earner of the income of investment, till then the assessee is not liable for tax nor exigible for any of the penalties more particularly penalties levied under ss. 273 and 271(1)(c). It is also submitted by the assessee's counsel that the Dy. CIT(A) was correct in holding that there has been no reasonable opportunity given as laid down under s. 274 before levy of penalties, and therefore, no interference is called for in the peculiar facts of this case. 7. Having heard both the parties and after giving careful considerations to the submission made and facts of the case we agree wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and order had become non-existent and non est then the assessee cannot be visited with the penalties initiated during the course of such assessment proceeding and the penalties levied are, therefore, illegal and liable to quashed. 8. Looking from another angle also the penalties cannot survive, for the reason that the ITO made the assessment on the assessee on a protective basis though the return was filed by her through her guardian claiming declared income to be her income. The finding given by the ITO in that protective assessment is that the income and investment made is not the income or investment by or of the assessee but that of her father and the ITO has specifically mentioned that the same will be assessed in the hands of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her such income allegedly concealed would be assessed in the hands of X or Y unless the determination is made by the ITO, no charge of concealment can be made against the person in whose hands the income is added on protective basis. He is liable only if it is his income which has been concealed. In other words, a person upon whom a substantive assessment is made would only be liable for penalty provided the conditions precedent for the imposition of the penalty are satisfied." The Guwahati High Court has also held in the case of Metal Stores vs. CIT (1990) 89 CTR (Gau) 132 that protective penalties cannot be levied or sustained. We, therefore, hold that the assessee was not liable for any penalty under ss. 271(1)(b), 273 or 171(1)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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