1984 (7) TMI 132 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Jurisdiction of the Income Tax Officer (ITO) to levy the penalty.
3. Validity of the supplementary return filed by the assessee.
4. Specificity of the charge in the penalty notice.
5. Correctness of the penalty amount imposed.

Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):

The assessee did not disclose income from his partnership in the firm Hukam Chand Swarn Singh in the original return filed on 25-9-1975. The ITO discovered this omission and issued a notice under section 148. The assessee filed a supplementary return on 23-2-1977 before the notice was served, but the ITO imposed a penalty of Rs. 24,047 for concealment of income. The assessee argued that the omission was unintentional and that the supplementary return was filed voluntarily. However, the Tribunal found that the omission was deliberate, noting that the assessee had the supplementary return ready during the original assessment but chose not to file it. The Tribunal agreed with the ITO and upheld the penalty.

2. Jurisdiction of the ITO to Levy the Penalty:

The assessee contended that the ITO lacked jurisdiction to impose the penalty, arguing that at the time of filing the original return, only the Inspecting Assistant Commissioner (IAC) was competent to levy penalties. The Tribunal referred to the decisions of the Punjab and Haryana High Court and the Madhya Pradesh High Court, which held that procedural provisions for penalty imposition are retrospective. Thus, the ITO had valid jurisdiction to impose the penalty.

3. Validity of the Supplementary Return:

The assessee claimed that the supplementary return filed on 23-2-1977 was invalid because it was filed before the service of the notice under section 148 and before the original assessment was completed. The Tribunal noted that the return was voluntarily filed and endorsed by the assessee to be treated as compliance with the notice under section 148. However, the Tribunal acknowledged the need for further deliberation on whether such a return is valid and whether the assessment based on it is valid. The Tribunal remanded this issue to the AAC for fresh determination.

4. Specificity of the Charge in the Penalty Notice:

The assessee argued that the penalty notice was vague because it did not specify whether the charge was for concealing income or furnishing inaccurate particulars. The Tribunal noted that the ITO had mentioned both charges in the standardized notice but had not struck out the inapplicable alternative. The Tribunal found that this technical error did not vitiate the ITO's jurisdiction, as the assessee understood the context and responded to the notice. The Tribunal held that the charge of concealment was clear and upheld the penalty.

5. Correctness of the Penalty Amount Imposed:

The assessee pointed out that the penalty imposed was Rs. 24,047, which was less than the minimum penalty imposable. The Tribunal noted that the ITO had intended to impose a penalty of Rs. 26,928 and had obtained approval for this amount from the AAC. The discrepancy was due to an inadvertent mistake, which could be rectified under section 154 of the Act. The Tribunal did not find this to affect the jurisdiction of the ITO.

Conclusion:

The Tribunal upheld the penalty imposed by the ITO, finding that the omission of income was deliberate. The Tribunal confirmed the ITO's jurisdiction to levy the penalty and found no merit in the argument about the specificity of the charge. The issue of the validity of the supplementary return and the consequent assessment was remanded to the AAC for fresh determination. The appeal was allowed for statistical purposes.