9911796707
TMI Blog1978 (1) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 1970-71 and 1971-72 showing income from house property at Rs. 5,557 and Rs. 5,817 respectively. The assessments were thereupon completed accepting the income shown by the assessee and also adding the un-explained investment in the building at Rs. 6,00 in the assessment year 1968-69 and Rs. 6,000 in the assessment year 1969-70. The Income-tax Officer also initiated proceedings for the imposition of penalty under s. 271(1)(c) of the Act. 3. The assessee pleaded before the Income-tax Officer that the omission to show income from the said house property was due to her impression that the income from house property was not liable to tax for the first three years and that it will become taxable only after paying back the capital which she had borrowed for constructing the property. The assessee also contested the validity of the notice issued under s. 271(1)(c) of the Act as well as the jurisdiction of the Income-tax Officer to impose the penalty. The Income-tax Officer was of the view that there was deliberate concealment of income and he imposed penalties of Rs. 13,560, Rs. 18,860, Rs. 11,100 and Rs. 11,700 respectively for these four assessment years. 4. The assessee appealed to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal in the case cited by the revenue was required to be reconsidered. The rejoinder of the revenue to this plea was that the decision of the Appellate Tribunal cannot be reconsidered and such a plea should not be entertained at all. 6. Before we consider the technical objections of the assessee to the imposition of penalty, we shall first consider the question whether there was in fact any concealment of income. The short facts are that the assessee had constructed a property and let it out from 10th Nov., 67. This house was in addition to another house already owned by the assessee in respect of which the assessee had filed the returns originally on 16th June, 69 for the assessment years 1968-69 and 1969-70 showing income of Rs. 4,429 in each year. Similar returns were filed for the assessment years 1970-71 and 1971-72 on 16th Oct., 70 and 25th Nov., 71 showing the same income from one property only. The department gathered information about the existence of the second house property and issued notices under s. 147 for the assessment years 1968-69, and 1969-70 and under s. 271(1) (c) for the assessment years 1970-71 and 1971-72 all of which were served on the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from 1st Apr., 1971. Prior to the amendment according to s. 274 if the minimum penalty imposable exceeded a sum of Rs. 1,000, the Income-tax Officer had to refer the case to the Inspecting Assistant Commissioner for imposition of penalty. After the amendment he had to make the reference only if the amount of income concealed exceeded a sum of Rs. 25,000. The revenue relied upon the decision of the Appellate Tribunal in the case of Smt. Chhagni Devi Dhadha (ITA Nos. 858 (Gau) and 859 (Gau) of 1975-76) where it was held following the decision of the Supreme Court in the case of Jain Brothers and Others(1) that the law applicable must be one prevailing on the date on which the Income-tax Officer initiated the penalty proceedings, In these cases, the assessments were made on 4th June, 1973 for all the years and, therefore, according to the revenue the Income-tax Officer's jurisdiction as governed by the amended section permitted him to impose the penalty himself without referring the matter to the Inspecting Assistant Commissioner. On the other hand, the contention of the assessee is that the crucial date for the imposition of penalty is the date of the return in which concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is the date of initiation of penalty proceedings after the completion of assessment was actually a decision on one of the issues involved since it was held that the selection of such date was not discriminatory and was not ultra vires the Constitution. Therefore, the observations of the Supreme Court that "it is obvious that for the imposition of penalty, it is not the assessment year or the date of the filing of the return which is important but it is the satisfaction of the Income-tax Authorities that the default has been committed by the assessee which would attract the provisions relating to penalty", is the ratio of the case and not an obiter. Even if it is considered to be an obiter dicta, it is a considered obiter dicta which is binding on all courts in India because of the provisions of article 141 of the Constitution of India (See Seervai's Constitutional Law of India, 1968. It was contended that since the Andhra Pradesh High Court has not followed it, we should also not follow it as the observation of the Supreme Court is perhaps not applicable to all cases of penalty. We do not find such substance in this contention also, for, as we have seen already in the Andhra Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was treated as a substantive amendment which should not be allowed to affect an assessee who had committed an offence prior to the introduction of the explanation. It is of interest to note that even on this question there is a decision of the Orissa High Court in the case of K. C. Behera and Others(12), following the decision of the Supreme Court in the case of Jain Brothers and Others(1) and giving retrospective effect to the Explanation to s. 271(1)(c) introduced in 1964. 11. In the present case, the assessee has not been able to show any connection of the amendment of s. 274 with any substantive provisions of the Act. Of course, the quantum of penalty was linked with the amount of income concealed instead of the amount of tax avoided by the amendment which came into force from 1st April, 1968. But the change of the criterion for the exercise of the jurisdiction by the Income-tax Officer to correspond to the change in the quantum of penalty cannot be regarded as being intricately connected with any substantive alteration in the law. The amendment to s. 274 relates only to the forum simpliciter and does not in any way affect the right of the assessee. We are therefore, of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e effect that if the court had jurisdiction to try a suit when it came for disposal it cannot refuse to assume jurisdiction by reason of the fact that it had no jurisdiction to entertain it at the date when it was instituted. We are of the opinion that these observations do not assist the assessee. Those principles apply with regard to civil litigation where the jurisdiction of the Court is decided at the trial and not at the institution of the suit, and therefore, the court has to take into account any intervening change in the law. On the other hand, as we have seen above, s. 274 requires the question of jurisdiction to be decided at the inception of the proceedings and does not provide for any alteration of the forum if the law should change thereafter. Therefore, as held by the Gujarat High Court even though the amendment is with regard to procedural law it had to be decided with reference to the fact as it existed at the time of the initiation of the penalty. Even if we apply the principle outlined in the observation of Chagla, J. It would lead to the conclusion that the jurisdiction of the officer must be determined as on the date when the order of penalty was passed and sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty proceedings after the amendment of s. 274 by which he was empowered to deal with matters relating to concealment of less than Rs. 25,000. Since the amount concealed in these cases did not exceed Rs. 25,000, he was within his jurisdiction to proceed with the penalty proceedings and impose the penalties. 16. With regard to the quantum of penalty it was pointed on behalf of the assessee that in the first two assessment years, the amount of income from house property concealed was only Rs. 780 and Rs. 4,430 excluding the additions made on account of unexplained investment. The contention of the assessee that unexplained investment cannot be regarded as concealed income has to be accepted since there is no evidence to show that there was any concealment as such in respect of those additions and the assessee must be taken to have discharged the onus cast by the Explanation with regard to those additions as the assessee has claimed in the assessment that she had enough sources to explain their investment and the addition was made only because the value of the construction was estimated. We are, therefore, of the opinion that in the first two assessment years, the concealed income can ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
