1971 (12) TMI 31 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty proceedings by the Appellate Assistant Commissioner were valid under the Income-tax Act, 1961 ? - Whether an Appellate Assistant Commissioner is empowered to levy penalty while confirming the additions made by the Income-tax Officer?

Summary

Issues:
Validity of penalty proceedings by the Appellate Assistant Commissioner under the Income-tax Act, 1961.

Analysis:
The judgment pertains to a dispute regarding penalty proceedings under the Income-tax Act, 1961 for the assessment year 1963-64. The Income-tax Officer made additions to the trading account of the assessee due to the absence of a stock register and quantitative tallies. Additionally, a deposit amount was also added, which the assessee claimed was from the sale proceeds of ornaments. The Appellate Assistant Commissioner upheld these additions and imposed a penalty of Rs. 4,500 for concealing income, which was later reduced to Rs. 2,000 by the Tribunal.

The primary issue revolved around the jurisdiction of the Appellate Assistant Commissioner to initiate penalty proceedings under section 271(1)(c) of the Income-tax Act. The Tribunal held that the Appellate Assistant Commissioner was competent to do so, citing a Supreme Court decision in Kamlapat Motilal v. Commissioner of Income-tax. The Tribunal also rejected the argument that a notice under section 271(1)(c) should be issued before the completion of proceedings, stating that section 275 only pertains to the limitation period for imposing a penalty.

The court analyzed the provisions of section 271(1) of the Act, emphasizing that the satisfaction of concealment of income during any proceedings under the Act empowers either the Income-tax Officer or the Appellate Assistant Commissioner to impose a penalty. Drawing parallels with section 28(1) of the Indian Income-tax Act, 1922, the court highlighted that the conditions for applying section 271(1) were met in the present case during the appellate proceedings.

Referring to a previous decision in Commissioner of Income-tax v. Bankey Lal Hira Lal, the court reiterated that issuing a notice under section 271 during assessment proceedings is not mandatory, and section 275 only deals with the limitation period for penalties. Ultimately, the court upheld the Tribunal's decision, ruling that the penalty proceedings by the Appellate Assistant Commissioner were valid under the Income-tax Act, 1961.

In conclusion, the court affirmed the correctness of the Tribunal's decision and answered the question posed in the affirmative. The Commissioner was awarded costs, assessed at Rs. 200, with the counsel's fee set at the same amount.