Extension of Board's instruction No.1622 to WT and GT. - Income Tax - 1850/1990

INSTRUCTION NO. 1850/1990 Dated: June 27, 1990 Attention is invited to the Board's instruction No.1622 dated 4-6-85 regarding the non-initiation of penalty proceedings/dropping thereof in cases wherein the penalty imposable u/s.271(1) (a), 271(1)(b) or 273 of the I.T.Act does not exceed Rs.500. The aforesaid instruction was issued in respect of penalty proceedings under the I.T.Act only and was not extended to Wealth-tax Gift-tax proceedings. It has been reported that in a large number of cases of Wealth-tax and Gift tax also similar penalty proceedings have been initiated and are pending. 2. It may be pointed out that the problem would relate only to assessment year 1988-89 and earlier asst. years with effect from the assessment year 1989-90 the provisions for levy of penalty u/s.271(1)(a) of the I.T.Act and corresponding sections 18(1)(a) of the Wealth-tax Act and 17(1) (a) of the Gift-tax Act have been omitted. Further the minimum penalty leviable u/s.271(1)(b) of the I.T.Act and the corresponding sections 18(1)(b) of the wealth-tax Act and 17(1)(b) of the Gift-tax Act has now been prescribed as Rs.1000 with effect from the Assessment year 1989-90. 3. It has therefore been decided that the Boards instruction No.1622 dated 4-6-85 should be extended to such penalty proceedings under the wealth-tax and Gift-tax Acts pertaining to Asstt. year 1988-89 and earlier assessment years. Accordingly, penalty proceedings u/s.18(1)(a) 18(1)(b) of wealth-tax act, 1957 and u/s.17(1)(a) 17(1)(b) of the gift tax act 1958 may not be initiated in respect of any such Asstt. year in a case where the maximum penalty imposable under the relevant provision does not exceed Rs.500. It has also been decided that all pending penalty proceedings in such cases should be dropped. The above instructions may be brought to the notice of all the officers working in your charge.