Commissioner of Income Tax vs Lalit Mohan

R.L. Gulati, J.—This is a reference u/s 256(1) of the Income Tax Act, 1961.

Ex parte assessment orders were passed against Sri Lalit Mohan for the assessment years 1962-63 and 1963-64 and in due course penalties were levied on him under sections 271(1)(a) 271(1)(b) and 273(b) of the Income Tax Act, 1961. On appeal against the assessments, the Appellate Assistant Commissioner of Income Tax held that the status of the assessee for assessment purposes was that of Hindu undivided family and not, Lalit Mohan, as an individual. On appeal against the penalties, the Appellate Assistant Commissioner of Income Tax found that since the status of the assessee had been determined to be that of an Hindu undivided family and as that finding had become final, the department not having filed an appeal against if, the penalties imposed in respect of the income of a Hindu undivided family on an individual could not be sustained. The department''s appeal was dismissed by the Tribunal which agreed with the view taken by the Appellate Assistant Commissioner of Income Tax. The Commissioner of Income Tax is aggrieved and at his instance the following question of law has been referred to us :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the cancellation of penalties levied upon the assessee under Sections 271(1)(a) 271(1)(b) and 273(b) of the Income Tax Act, 1961, relating to the assessment years 1962-63 and 1963-64 was valid having regard to the fact that the status of the assessee had been finally determined as that of a Hindu undivided family ?"

Now, penalty can be imposed upon an assessee against whom an assessment order has been passed. The assessment order having been passed against a Hindu undivided family of which Lalit Mohan might have been a member, penalty cannot be imposed upon a member of the family in his individual capacity. The person assessed and the person upon whom a penalty is levied must be the same. As in the instant case the income had been assessed in the hands of the Hindu undivided family, the penalty also could be levied on that entity alone and not on a member of the family in his individual capacity. The view taken by the Tribunal is right and we accordingly answer the question in the affirmative, against the department and in favour of the assessee. The assessee is entitled to the costs which we assess at Rs. 200.