1988 (8) TMI 82 - HC - Income Tax

Summary

Issues:
1. Interpretation of the expression 'in the course of any proceedings' in section 271(1) of the Income-tax Act, 1961.
2. Competence of the Appellate Assistant Commissioner to initiate penalty proceedings under section 271(1)(a) during appeal proceedings against a penalty order by the Income-tax Officer.

Analysis:
The High Court of Rajasthan addressed an application under section 256(1) of the Income-tax Act, 1961, regarding the interpretation of the expression 'in the course of any proceedings' in section 271(1) and the competence of the Appellate Assistant Commissioner to initiate penalty proceedings during appeal proceedings against a penalty order by the Income-tax Officer. The relevant assessment years were 1974-75 and 1975-76, where penalties were imposed under section 271(1)(a) on the assessee by the Income-tax Officer. The Appellate Assistant Commissioner, after allowing the appeal, imposed penalties on the assessee himself. The Tribunal held that the Appellate Assistant Commissioner could not impose penalties during appeal proceedings against the penalty order. The main issue was whether an appeal to the Appellate Assistant Commissioner against a penalty order falls within the expression 'in the course of any proceedings under this Act' in section 271(1).

The High Court analyzed the scope of the expression 'in the course of any proceedings under this Act' and concluded that it includes an appeal to the Appellate Assistant Commissioner against a penalty order. The Tribunal's view that the Appellate Assistant Commissioner cannot impose penalties during appeal proceedings was deemed incorrect. The Court emphasized that the Act expressly provides for appeals to the Appellate Assistant Commissioner, and there is no reason to exclude such appeals from the wide expression used in section 271(1). Additionally, the Court referred to the powers granted to the Appellate Assistant Commissioner under section 271(1) and section 251(1)(b), indicating that initiating penalty proceedings during appeal proceedings is not precluded by the Act.

Drawing parallels with a previous decision of the Allahabad High Court regarding the Indian Income-tax Act, 1922, the High Court upheld the Appellate Assistant Commissioner's authority to impose penalties during appeal proceedings. The Court found no reason to interpret the expression differently from the past decision and concurred with the view that the Appellate Assistant Commissioner has jurisdiction to pass orders under section 271(1)(a) during appeal proceedings. Consequently, the reference was answered in favor of the Revenue, holding that the Tribunal's view was unjustified, with no costs imposed.