The Commissioner Of Income Tax vs Rochaldas N Shroff (Huf) on 4 August, 2008

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Karnataka High Court

The Commissioner Of Income Tax vs Rochaldas N Shroff (Huf) on 4 August, 2008

Bench: K.L.Manjunath

~ . QUE EI\LTigROA'D,

IN THE HIGH COURT OF' KARNATAKA AT BANGALQRE

DATED THIS THE 04TH DAY 0:? AUGUST:.~2C} (};S__'__ ' 

PRESENT

THE HONBLE MR.JUSTICE;:  '  

AN???

THE HONBLE MR. 

 

1.'r.A.&1§g:g;g§%k3k'2e0;4j'%«%  

BETWEEN:

1. THE cQM§a3.Ssiéa§:gR QF 1._r.¢V'{:.r:'>'£.J1..1_=;Vf;f.ai<
(LR. BUILIZEING} QUEENS ::e:oAD;, "
BANGALORE. _ _     

2. THE ASSISTANT coMMI'ss1cr:ER 0:6'
INCOME TAX, "iNVES'I'§G-ATiON,V 
c:1RcLE--4t1}, ' . "   

CR. IBIIILYJIHG.

 EMGAv:,oR§~:';.   :APPELLANTS

"gm  . gsv.)

AND:  

V .sR1.Rc$&HALbAs  SHROFF (HUF)

£x¥{).366, UPPER PALACE ORCHARDS,

5 I ' " -REE? sxTE:s:s':oN,
 ' :3ja.NcaALLQRE-so. : RESPONDENT

ggaisstrcubswr ssnvwg F THIS I.'§'.A. I8 FILED UNBER SECTION 260%; OF THE iNCOME TAX 196:, Axzzsim our 01? (335233 DA'§'EI) 12.12.9003 PASSED IN rm ' l\_iO.2812fBANG/1991 FOR 'rm; ASSESSME1\¥'£" YEAR 1935-87 PRAYENG '11::

FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY ,3, THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE, rm NOJ2812/BANG/1991, 13?. 12.12.2003 comrmmime THE ORDER .<)_':«'.V"I*?;'4.I_§:

APPELLATE COMMISSEONER AND CONFIRM THE oRBEE;""9A.S'$Ets1' iésvg THE ASSESTANF COPvIMiSSiOP«EER OF ENCOIME TAX, ::~=_$fEs';A'e:g}ATr0N;e " CIRCLE4 :1}, BANGALORE, E'I'C., THIS I.T.A. COMING ON FOR HEARiI~zG, J, DELIVERED THE FOLLOWING! K JUDGM'ENj;» This appeal is by tJ1e'~.z*ﬂeve1_r1iie tiie eencurrent findings of the order passed of Income Tax (Appeals), the Income Tax AppeILateV1._{)1rier,b§'é:i.E;géiu:\§é';ii: ..i'}';ﬁi No.2812]BANG/1991 dated 12.12.2003'. -

netiee"iS on the respondent, he is uI1- circumstances, We have heard the ccmnsei for .the"revenue;j_ AA ; ii '37}ie following substantial questions of law are to be i by us in this appeal.

1. When no explanation is oﬁezed to the show cause notice issued under Section 271 (1) (c) of the Act, Whether the Commissioner of Income Tax (Appeals) and the Tribunal were I"./' -3- jusUﬁed' in holding that levy of penalty sm1§1'e[e% ' ' not arise in case of estixngted in.eo1ne:gf=: * account of unexplainable inv_e'sime_nt 'A 'aﬁcl, X consequent interest thereon

2. Whether the Commissieeer of (Appeals) and the }usﬁﬁed dropping the perialtye on the ground that the

4. The fades ,esV--tie':Ve"1itider:

rS/ The asse.:Vss;eeg_i's ti;e--. moaey leggder. He 1&1 ﬁled the return of 2&3-.1_9-37' declaring the income of Rs.1I,530/ ~V._ was eompieted on 29.1.1988 assessing the i"V4£}t.'--l_} i'1iLV!1CO1gI;1£'::Ett Rs.19,32,197/-. 'There was a of the Income Tax Act on 29.1 1.1985 and promotes were seized. During the eeaxehg ievealed that the assessee had advanced a " i;' '«._ C'e:*I1Aside1"é2t1')V_1Ae sum of money to various parties and had obtained notes £10113; them. Though an oppomznity was given ﬁne assessee to expiain to whom the 103.15: is advanced and ifthe rate of interest charged thereon, the assessee did not give any answer. Therefore, the assessment was completed for the ﬁx -4- block period. Thereafter, the penalty proceedings under Section 271 (1) ((2) of the Income Tax Act, .t no reply was given by the assesses; in the penalty was levied.

5. Aggievexrl by the a_sses'see""'ﬁied appeal before the Commissioner t_Inc_ont_et ﬁoangalom. The Commissioner of Income upon certain judgments of vazfions gheid can be levied on account of add§.tions_'«..$ade. under the deemed provisions of the Income 'Tax s.§<,~;t" held that in View of the death " . 7 <2». o3"">Y'"

of the Vassessee.V_'peVna1ty_ cannot be enforced fang the legal J Aeconiingly, the appeal was aiiowed. Against Va was ﬁled by the revenue which appeai also tiismisseti. Aggrievod by these two concurrent " ﬁndingxs of fact, the present appeal is ﬁleci. The learned counsel for the revenue contends that the Vjudgimentscited by the Commissioner of Income Tax (Appeals) in in/C5 «paxa 2 of its order are the jndwents rendered by various Courts pxtiorto the insertion of explanation to Section 271 (1) l<'%/ ,5-

(c) and therefore, these judgments are not facts of the case. He further contomis that the HUF, Even if e Kartha dies, HUI? 'V:'§f'hore:Eb1'o;V« the ﬁnding of the Commissioner of well as the Txibunal that zraqxnot be a V dead person and cannot be icgal zepzescntatives is incorreot; two points, he mqucsts us to set aséoe th.a"'oro_or matter to the C0II1ﬂ1iSSi03161_"_ for further consicleraigioxé... ' 7, _vExp}Qéi::g§ﬁ:oI1.,'«(" SVection 271 (1) of the Income Tax " 'Aot hem "

'V 1. - Where in respect of any to the computation of the total inoomoiof any person under this Act, - : such person fails to offer an explanation or x N offers an cxpianation which is found by the [Assessing] Oﬁoer or the [Commissioner (Appealsﬂ [or the Commissioner] to be false, or H» -5- (B) such person oﬁhrs an expianation he is not able to substantiate [and fail:s$'::f;oV prove that such explaxlatiqq "bo'&1a"'i'i&_t1 . . V and that all the facts relating sine: ' V A anti material to the = n total income have becVii_§i'is;f:losiét3. lays then, the amount add;-d or, in the tota} income of '4éissiv'g>1'b"ze:su1t thereof shail, {for th€,P"1'.P0SC.S _0f this sub» section, be, '(ic::e '_1ned:;A_ ta; .:i:ép:rt£§ss:1tV income in respect qf 1;a»%I¢_' bsen concealed."

3. substituted with eﬁhct fznm 1.4.1976. &J:i'l:'§I'ﬁ€ judsgginciiit relied upon by the assesses are ..dc2ive:i;d by the.' 'Cn1;;1;_,¢.whﬂe considering the pmvisions of "W @'~.-_~r¢'Qe;><Sﬁ Xsecfsop 271.(1)"-pgior to amendment to Explanation (1), We am of Commissioner of Income Tax Appeals as weﬁ have committed an error. in the V "c'Vu*e1.:.:;1:1staVin"ccs, it is for the Commissioner of Income Tax to examine ﬂu-2 effect of Explanation (1) to Section 'T (1) of the Act in me light of the judgment mused upon by it.

" " fﬁmilarly, the assesses herein is a HUF', if the Kartha dies, the HUF wiii not be dissoived autonzatically and another senior 8/ afresh in t.he'o§':1ie'jc1}'sez§+ai§ic;ns mac by us as above. member 91" the joint family would be made as a Kartha,V.:'z3;1ess and until the paI1itio21 is effected in acooniance w;;;:I1a§§;;%.:"'ig the present case, no document is placed by M Show that HUI? was dissolved immgdiatzely :35 a V' the Kartha. Therefore, we are of the ._ the Tribunal as well as the ComL'ﬁ_iS's3'.Vonef 'tha'iV no cbuld " V be enforced against the gegai r:p1§scntaﬁvb.S"is,_Aba;}i in law. Accordingly, we answer iemand the matter to the Commissioner of £n§:0me::'I'ais<" i';O".c1ecide the case /'I. 63..

Sd/~ Judge Sd/-

Judge

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