1978 (9) TMI 88 - AT - Income Tax

Summary

Issues:
1. Penalty levied for alleged concealment of income under s. 271(1)(c) of the IT Act, 1961.
2. Jurisdiction of the IAC to levy the penalty.

Detailed Analysis:
1. The appellant, a textile manufacturer, objected to a penalty of Rs. 31,220 imposed by the IAC for alleged income concealment in the assessment year 1965-66. The appellant initially declared a total income of Rs. 71,422, later revised to Rs. 74,693. The ITO assessed the income at Rs. 1,29,840, eventually revised to Rs. 1,02,994 after appeals. Penalty proceedings were initiated on 30th March, 1971, under s. 271(1)(c), leading to the penalty imposition by the IAC, which the appellant appealed against.

2. The appellant argued that the penalty order was illegal due to the deletion of s. 274(2) by the Taxation Laws (Amendments) Act, 1975. The appellant contended there was no income concealment and that if a penalty was applicable, it should be based on the tax sought to be avoided before the amendment of s. 271(1)(c)(iii) in 1968. The Departmental Representative countered, stating that the penalty proceedings were valid, citing the six-month window under s. 275 for penalty imposition after the Tribunal's communication.

3. The Tribunal analyzed the jurisdiction issue, referring to the deleted s. 274(2) which empowered the IAC to impose penalties exceeding Rs. 25,000. Citing decisions from Orissa and Allahabad High Courts, the Tribunal held that the IAC's penalty order was without jurisdiction and thus illegal and invalid. The Tribunal canceled the penalty of Rs. 31,220 levied by the IAC, thereby allowing the appeal. The Tribunal did not delve into the merits of the case due to the jurisdictional ruling.

This detailed analysis covers the issues of penalty imposition for income concealment and the jurisdictional aspect of the IAC's authority to levy penalties, as discussed in the legal judgment delivered by the Appellate Tribunal ITAT DELHI-C.