1980 (11) TMI 22 - HC - Income Tax

Summary

Issues:
1. Whether the petitioner could be held guilty of concealing income or furnishing inaccurate particulars?
2. Whether the Tribunal could impose a penalty without an appeal by the department?

Analysis:

Issue 1:
The assessee filed a return showing business income at Rs. 4,434 for the assessment year 1961-62. The Income Tax Officer (ITO) made additions to the income under different heads, resulting in a total addition of Rs. 3,17,964. The ITO initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, and the Inspecting Assistant Commissioner (IAC) imposed a penalty of Rs. 1,00,000 on two items. The Tribunal partly allowed the quantum appeal, reducing the additions. The Tribunal set aside the penalty imposed by the IAC on certain heads but imposed a penalty on a different head of business income, not considered by the IAC. The High Court held that the penalty imposed by the Tribunal under the new head of business income was beyond the scope of the appeal, as the only question was the penalty on the additions under specific heads. Therefore, the Tribunal's action of imposing a penalty on business income was deemed illegal and set aside.

Issue 2:
The Tribunal's imposition of a penalty on business income, not considered by the IAC, was found to be beyond the scope of the appeal. The High Court ruled that since the department did not raise any grievance against the non-imposition of a penalty on business income before the Tribunal, the question of imposing a penalty on that head did not arise for decision. Consequently, the Tribunal's penalty on business income was declared illegal. The High Court answered question 2 in the negative in favor of the assessee, leading to question 1 not requiring a decision. The reference was answered in favor of the assessee, who was awarded costs for the reference.

This judgment clarifies the limitations on the Tribunal's authority to impose penalties beyond the scope of the appeal and emphasizes the importance of raising grievances in the prescribed manner.