1983 (5) TMI 43 - AT - Income Tax

Summary

Issues:
1. Validity of penalty proceedings under section 273(c) initiated during reassessment proceedings.

Analysis:
The judgment deals with the issue of whether penalty proceedings under section 273(c) of the Income Tax Act initiated during reassessment proceedings are valid. The case involved the assessee, where the Income Tax Officer (ITO) initiated penalty proceedings for not furnishing a higher estimate of advance-tax during reassessment proceedings for the assessment years 1974-75 and 1975-76. The Appellate Assistant Commissioner (AAC) canceled the penalty orders, stating that penalty proceedings under section 273(c) can only be initiated during regular assessment, not reassessment. The AAC relied on judicial decisions, including the Patna High Court case of CIT vs. Ram Chandra Singh.

The department argued that reassessment should be considered a part of regular assessment and cited the Bombay High Court case of Deviprasad Kejriwal vs. CIT to support their interpretation. However, the assessee's counsel countered this argument by pointing out that the definition of "regular assessment" in the Income Tax Act, 1961, is clear and distinct from the context of the earlier Act. The counsel referred to the Bombay High Court judgment in D. Swarup, ITO vs. Gammon India Ltd., where it was clarified that the definition of "regular assessment" in the current Act must be applied as per the legislative intent. The High Court emphasized that the specific definition of "regular assessment" in the Act must be adhered to, especially in cases of reassessment under section 147.

Based on the legal position explained by the Bombay High Court regarding the definition of "regular assessment" under section 2(40) of the Income Tax Act, and the requirement for penalty under section 273 to be levied only during proceedings related to regular assessment, the Appellate Tribunal upheld the AAC's decision to cancel the penalty orders imposed during reassessment proceedings for the assessment years 1974-75 and 1975-76. Consequently, the appeals filed by the department were dismissed, affirming the AAC's consolidated order.