1993 (7) TMI 62 - HC - Income Tax

Summary

Issues: Validity of reference by Income-tax Officer under section 274(2) to Inspecting Assistant Commissioner for penalty imposition under section 271(1)(c) of the Income-tax Act, 1961.

The judgment of the court addressed the issue of whether there was a valid reference by the Income-tax Officer under section 274(2) to the Inspecting Assistant Commissioner for the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961. The deceased assessee had been penalized under section 271(1)(c) for the assessment year 1973-74. The assessee argued that the penalty was imposed by the Inspecting Assistant Commissioner under a repealed section, and there was no valid reference made to him by the Income-tax Officer. The court noted that the assessment was completed on March 30, 1976, and a letter referring the case for penalty imposition was sent to the Inspecting Assistant Commissioner on March 31, 1976. The assessee contended that this letter only proposed penalty proceedings and did not constitute a valid reference. The court found it essential to review the letter of March 31, 1976, and any other references made by the Income-tax Officer to determine the validity of the reference. Therefore, the court directed the Tribunal to provide a supplementary statement including all relevant documents and details for a proper adjudication of the references.

Regarding the merits of the assessment, the assessee argued that section 52(2) of the Act was applicable, precluding the invocation of section 271(1)(c). However, the Revenue's counsel pointed out that the Tribunal, based on reports from the Income-tax Officer, determined the consideration for a transfer at Rs. 2,69,000, thereby negating the need for section 52(2). The Tribunal's reference included the order imposing penalty by the Inspecting Assistant Commissioner and the Tribunal's partial confirmation of the same. The court emphasized the importance of reviewing the original order of assessment and the Tribunal's order in order to make a proper adjudication. As the references were pending since 1983, the court directed the Tribunal to promptly provide the necessary documents and details to facilitate a timely resolution of the case. The Tribunal was instructed to submit the supplementary statement of the case, including all relevant documents, by a specified date for further proceedings and final decision by the court.