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1. Interpretation of section 271(1)(a) of the Income-tax Act, 1961 regarding the cancellation of penalty. Detailed Analysis: The case involved a question of law referred by the Income-tax Appellate Tribunal, Patna Bench "A," regarding the cancellation of a penalty under section 271(1)(a) of the Income-tax Act, 1961. The dispute arose from a delay in filing the return for the assessment year 1970-71, leading to penalty proceedings initiated by the Income-tax Officer. The initial notice issued on December 10, 1971, did not mention the assessment year, but a subsequent notice rectified this omission on March 12, 1974. The Appellate Assistant Commissioner reduced the penalty but upheld its imposition. The Tribunal, however, considered the first defective notice and canceled the penalty order. The key argument presented was that the second notice, which included the assessment year, validated the proceedings, despite the defect in the first notice. The court referenced the case law of D. M. Manasvi v. CIT [1972] 86 ITR 557 (SC) and Padgilwar Brothers v. CIT [1971] 81 ITR 258, emphasizing that the satisfaction of the Income-tax Officer during assessment precedes the notice issuance and that subsequent notices can rectify defects in earlier ones. The court held that the second notice, though referencing the flawed first notice, was valid and served correctly on the assessee. Consequently, the Tribunal's decision to cancel the penalty based solely on the defective first notice was deemed unjustified. The judgment concluded that the penalty of Rs. 930, as assessed by the Appellate Assistant Commissioner, was justified, and the Tribunal erred in annulling the Income-tax Officer's penalty order. The ruling favored the Revenue and rejected the assessee's appeal. The judges concurred on this decision, and no costs were awarded. The judgment instructed the forwarding of a copy to the Assistant Registrar of the Tribunal for necessary actions in line with the court's decision.
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