1968 (9) TMI 21 - HC - Income Tax

Whether in respect of the assessment for 1961-62 made under the provisions of the Indian Income-tax Act, 1922, penalty proceedings could be validly initiated and concluded under section 271 read with section 274 of the Income-tax Act, 1961 - Held, yes

Summary

Issues:
1. Validity of penalty proceedings under section 271 read with section 274 of the Income-tax Act, 1961 for the assessment year 1961-62.
2. Whether the assessee concealed income or provided inaccurate particulars justifying the penalty imposition.

Analysis:

Issue 1:
The High Court addressed the validity of penalty proceedings under section 271 of the Income-tax Act, 1961 for the assessment year 1961-62. The Tribunal had set aside the penalty imposed by the Inspecting Assistant Commissioner, citing that no penalty could be imposed under section 271(1) of the 1961 Act for an assessment completed under the 1922 Act. However, the Court clarified that as per section 297(2)(g) of the Income-tax Act, 1961, penalty proceedings could be initiated and concluded under the new Act for assessments completed after its enactment. The Court emphasized that the initiation of penalty proceedings under the 1961 Act was not dependent on whether the assessment was conducted under the old or new Act. Citing the case of Kishanlal v. Commissioner of Income-tax, the Court affirmed that penalty proceedings could validly be initiated under section 271 of the 1961 Act.

Issue 2:
The Court then deliberated on whether the assessee had concealed income or provided inaccurate particulars justifying the penalty imposition. Referring to Commissioner of Income-tax v. Punjabhai Shah, the Court highlighted that determining concealment of income is a question of fact based on the circumstances of the case. The Court stressed that the penalty proceedings require a criminal standard of proof, distinct from assessment proceedings. It was noted that the Inspecting Assistant Commissioner had found the assessee's explanation to be false, but had erroneously treated the penalty proceedings akin to proceedings for additional tax imposition. The Tribunal, on the other hand, correctly viewed the penalty proceedings as penal in nature but did not expressly find deliberate concealment of income by the assessee. Consequently, the Court refused to answer the second question, deeming it a question of fact.

In conclusion, the High Court affirmed the validity of penalty proceedings under the Income-tax Act, 1961 for the assessment year 1961-62 and declined to answer the question regarding the alleged concealment of income by the assessee, citing it as a question of fact. The assessee was awarded costs for the reference, with the counsel's fee fixed at Rs. 100.