1957 (3) TMI 74 - HC - Income Tax

Summary

Issues:
1. Imposition of penalty for concealment of income under section 28(1)(c) of the Indian Income-tax Act, 1922.
2. Legality of penalty order due to lack of opportunity of being heard.
3. Validity of subsequent penalty imposition after cancellation by the Appellate Assistant Commissioner.
4. Interpretation of sections 31(3)(f) and 33(2) of the Indian Income-tax Act, 1922.

Analysis:

1. The original order, Exhibit B, imposed a penalty of Rs. 750 on the assessee for suppression of income under section 28(1)(c) of the Income-tax Act, 1922. The Appellate Assistant Commissioner, in Exhibit C, cancelled the penalty citing lack of opportunity for the assessee to be heard before the order was passed, following a recent decision of the Orissa High Court. The appeal succeeded, and the penalty was ordered to be refunded if already paid.

2. Subsequently, the Income-tax Officer issued Exhibit F, imposing a fresh penalty of Rs. 750 on the assessee for concealment of income, despite the cancellation of the original penalty by the Appellate Assistant Commissioner. The Officer justified the new penalty on the grounds of deliberate concealment being established and the technicality of lack of personal hearing not rendering the proceedings illegal ab initio.

3. The key issue for decision was whether Exhibit F could be sustained in light of Exhibit C. The court referred to sections 31(3)(f) and 33(2) of the Income-tax Act, which allow for confirmation, cancellation, or variation of penalties by the Appellate Assistant Commissioner and provide for appeal to the Appellate Tribunal if the Commissioner objects to the order. Since no action was taken under section 33(2), the Income-tax Officer was deemed not entitled to ignore the Appellate Assistant Commissioner's decision and impose a penalty afresh as done in Exhibit F.

4. The court allowed the petition, holding that the Income-tax Officer's imposition of the penalty through Exhibit F was not valid in light of the earlier cancellation of the penalty by the Appellate Assistant Commissioner. No costs were awarded in the matter.