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Issues Involved:
The issue involves the setting aside of an order passed by the Income-tax Officer under section 271(1)(c) of the Income-tax Act, 1961, and whether the Tribunal was right in directing the Officer to pass a fresh order instead of upholding its cancellation. Summary: The High Court of Madhya Pradesh, in a reference u/s 256(1) of the Income-tax Act, 1961, addressed the question of law regarding the setting aside of an order by the Income-tax Officer under section 271(1)(c). During the assessment proceedings for the year 1973-74, it was found that the assessee had furnished inadequate particulars of income, leading to penalty proceedings under section 271(1)(c) of the Act. The Income-tax Officer, after satisfaction of concealed income, imposed a penalty of Rs. 45,245. The assessee contended that the order deserved to be quashed due to lack of approval from the Inspecting Assistant Commissioner and denial of a hearing opportunity. The Commissioner of Income-tax (Appeals) upheld these contentions and annulled the Officer's order. The Revenue appealed to the Tribunal, which directed the Officer to pass a fresh order in accordance with the law instead of upholding the cancellation. The High Court, after considering the arguments, upheld the Tribunal's decision based on the principle that a procedural irregularity, not affecting jurisdiction, can be rectified. Citing the decision in Kimtee v. CIT [1985] 151 ITR 73, the Court affirmed that such irregularities can be cured. Consequently, the Court answered the question in the affirmative, ruling against the assessee. The parties were directed to bear their own costs in this reference.
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