685/CBDT. - Income Tax - 685/CBDT

INSTRUCTION NO. 685/CBDT Dated : April 19, 1974 Section(s) Referred: 271 ,297(2) Statute: Income - Tax Act, 1961 Reference is invited to Board's instruction NO.132 in F.No.11/144/67-ITJ dated 3rd December, 1969 wherein the judgment of the Supreme court in the case of M/s Jain Bros. Others Vs. The Union of India and Other (77 I.T.R. 107) was reported. In this case, the supreme Court have observed as under:- " For the imposition of a penalty in respect of an assessment for the year ending on March, 31, 1962 or any earlier year which is completed after 1st day of April, 1962, the proceedings have to be initiated and the penalty imposed in accordance with the provisions of Section 271 of the Act of 1961. Thus the assessee would be liable to a penalty as provided by Sec.271(1) for the default mentioned in Sec.28(1) of the Act of 1922 if his case falls within the terms of Sec.297(2)(g). 2. In the course of an Audit objection, a point or law was raised as to whether in a case where an assessment relating to assessment year 1961-62 or an earlier year was completed after 1.4.62 but the penalty proceedings were initiated before 1.4.62 under the 1922 Act, the penalty leviable should be according to the 1922 Act or the provisions of the IT Act, 1961. 3. The Ministry of law have advised that in such cases penalty will be imposable under the 1961 Act. In such cases the proceedings validly initiated under the old Act should be deemed to have been initiated under 1961 Act and continued under the new Act by virtue of Section 297(2)(k) vide the decision of the Punjab High Court in Commissioner of income Tax vs.Bipinlal Kuthiala (83 ITR 182). 4. The correct position under the law may be brought to the notice of all officers working in the charge.