1985 (9) TMI 12 - HC - Income Tax

Summary

Issues:
1. Assessment of income for the assessment year 1961-62 under section 43 of the Income-tax Act, 1961.
2. Initiation of penalty proceedings under section 271 of the Income-tax Act, 1961.
3. Transfer of income-tax file and records of the assessee to a different Income-tax Officer.
4. Imposition of penalty on the assessee by the Inspecting Assistant Commissioner of Income-tax, Range XVII, Calcutta.
5. Challenge to the penalty order through an application under article 226 of the Constitution.
6. Discharge of the rule and dismissal of the application leading to an appeal by the assessee.
7. Contention regarding the authority competent to initiate penalty proceedings.
8. Examination of original records and acceptance of the authority's actions.
9. Validity of the penalty proceeding despite an incorrect statement in the notice dated February 28/29, 1968.
10. Dismissal of the appeal without any order as to costs.

Analysis:
1. The assessee filed its return of income for the assessment year 1961-62, following which the Income-tax Officer assessed the total taxable income at Rs. 10,86,483 under section 43 of the Income-tax Act, 1961. Subsequently, the Income-tax Officer found that the assessee had concealed income, leading to the initiation of penalty proceedings under section 271 of the Act.

2. The penalty proceedings were initiated by the Income-tax Officer, "F" Ward, District IV(3), Calcutta, who issued a notice to the assessee on March 24, 1966, and forwarded the case to the Inspecting Assistant Commissioner for necessary action. The Inspecting Assistant Commissioner imposed a penalty of Rs. 7,97,654 on the assessee, holding that the penalty proceeding had been validly initiated.

3. Following a transfer of the income-tax file and records of the assessee to a different Income-tax Officer, the Inspecting Assistant Commissioner of Income-tax, Range XVII, Calcutta, issued a notice to the assessee in February 1968, regarding the penalty proceedings, leading to the imposition of the penalty.

4. The assessee challenged the penalty order through an application under article 226 of the Constitution, which was dismissed, prompting an appeal by the assessee against the judgment and order dated September 22, 1976.

5. During the appeal, the contention was raised regarding the authority competent to initiate penalty proceedings, arguing that the initiation by the Income-tax Officer, Special Circle VII, Calcutta, was illegal and void. However, upon examination of the original records, the court found the actions of the authorities to be valid and lawful.

6. The court noted that the initial reference by the Income-tax Officer, "F" Ward, District IV(3), Calcutta, was valid, despite an incorrect statement in the notice dated February 28/29, 1968, by the Inspecting Assistant Commissioner. No other grounds were pressed by the assessee in the appeal.

7. The appeal was ultimately dismissed without any order as to costs, with the court clarifying that the judgment would not prevent the assessee from applying for reduction or waiver of interest on the penalty amount paid in instalments.