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TMI Blog1988 (10) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ase on merits and therefore the short delay of three days in the presentation of the appeals deserved to be condoned. Shri Anil Kumar, the learned departmental representative, opposed these submissions and contended that the reasons stated by the appellant would not constitute sufficient cause and therefore, the appeals should be dismissed as time barred. 3. After considering the submissions urged on both sides, I am satisfied that the reasons stated by the appellant for the delay of three days in the presentation of the appeals are genuine. Accordingly, I condone the said delay and proceed to dispose of the appeals on merits after considering the submissions of the learned counsel on both sides. 4. These appeals are directed against the orders of the AAC sustaining the penalties levied against the appellant under s. 271(1)(c) of the IT Act, 1961 for the six asst. yrs. 1965-66 to 1970-71. These penalties were levied by the ITO for concealment of income by the appellant in his money lending business, which he had not disclosed in the original returns filed by him, but which he admitted subsequently in the returns filed by him in response to the notices issued by the ITO under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. It is with reference to these materials found at the time of the search that the ITO worked out the income concealed at a total figure of Rs. 8,53,700 which he had distributed in various years, partly with reference to the investment in each year and partly by spreading over the investments where he could not identify the dates of investments. Shri Ananthachari referred to the cash-flow statement from 1954-55 to 1974-75 which was filed by the appellant and which was also the basis of the reassessments made by the ITO and pointed out that the income from money-lending business had in each of these years amounted to Rs. 18,000 for 1965-66 to 1967-68 and Rs. 20,000 each for the remaining three years 1968-69 to 1970-71. The learned counsel submitted that these are all estimates made in the absence of proper books of accounts and that for such estimated additions no penalty would be exigible as for alleged concealment of income by the appellant under s. 271(1)(c) of the Act. In this connection, the learned counsel relied on the order of the CIT(A) for the asst. yr. 1974-75 dt. 5th Dec., 1978 to point out how the estimates made by the ITO were found to be unsustainable and the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Anil Kumar submitted that this would be evident from the cash flow statement relied on by the assessee's learned counsel and argued that in view of this clear admission on the part of the appellant, there was no further onus on the Department to prove concealment of income, as the same stands proved by the appellant's own admission in his revised returns of income filed in response to the notices issued under s. 148 of the Act. In support of these submissions, the learned departmental representative relied on the following decisions of the Madras High Court: 1. CIT vs. J.K.A. Subramania Chettiar (1978) CTR (Mad) 35 : (1977) 110 ITR 602 (Mad) 2. S.R. Arulprakasam vs. Smt. Prema Malini Vasan, ITO (1987) 61 CTR (Mad) 54 : (1987) 163 ITR 487 (Mad) 3. CIT vs. Krishna Co. (1979) 13 CTR (Mad) 24 : (1980) 120 ITR 144 (Mad) 7. In his reply, Shri. N.C. Ananthachari, the learned counsel for the appellant relied on the finding of fact recorded by the CIT(A) in his order dt. 5th Dec., 1978 accepting the assessee's case that he and his wife were the owners of 65 acres of land and that the appellant was an influential landlord and also a Nattanmaikarar in his village. He also relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented his own income, no further evidence would be necessary to show that it was the amount which represented his income and that it represented his concealed income. Their Lordships held on the facts in that case that the levy of penalty was justified as the assessee had readily agreed to the inclusion of the amount as his income. Their Lordships have followed their earlier view in CIT J.K.A. Subramania Chettiar which was a case of a revised return. The same position has been reiterated in the latest decision of the Madras High Court reported in S.R. Arulprakasam vs. Smt. Prema Malini Vasan, ITO 163 ITR 487. In this case it was held by the High Court that where an assessee files a revised return after the concealment had been detected by the ITO, the contumacious conduct on the part of the assessee in filing the original return, which, if it had been accepted, would have resulted in avoidance of tax, would not be wiped out, that in the proceedings for imposition of penalty, the original return alone should not be considered in isolation without reference to the subsequent conduct of the assessee and all the facts and circumstances commencing with the filing of the original retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IT Act it was only the IAC or IT who had valid jurisdiction to levy penalties against the assessee, as the minimum penalty leviable exceeded Rs. 1,000. The learned counsel, however, fairly stated that this contention put forward by him may not be of any help to him so far as the last assessment year is concerned, as the original return was filed on 17th Nov., 1972 after the amendment brought about in s. 274(2) by the Taxation Laws (Amendment) Act of 1970 w.e.f. 1st April 1971. In support of these submissions, the learned counsel relied on the decision of the Supreme Court in Brij Mohan vs. ITO (1979) 12 CTR (SC) 198 : (1980) 120 ITR 1 (SC) and in Continental Commercial Corporation vs. ITO (1975) 100 ITR 170 (Mad). The learned counsel argued that this decision of the Madras High Court was directly applicable to the facts of the present case and therefore the penalties levied for the first five years should be cancelled. 11. Shri Anil Kumar, the learned departmental representative, submitted that the argument taken by the learned counsel was not raised either before the ITO or the AAC and, therefore, it should not be allowed to be taken up at this stage and that the same wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Lal Agrawala (1987) 167 ITR 825 (Pat). The learned departmental representative, therefore, argued that there was no lack of jurisdiction in the ITO levying the penalties in question and that the same should be upheld. He further argued that after the amendment brought above by the Taxation Laws (Amendment) Act of 1975 in s. 274 by deleting s. 274(2) w.e.f. 1st April 1976, the IAC could have no jurisdiction to levy the penalty and that in the present case since the reassessment proceedings were completed on 9th Feb., 1984 it was only the ITO who had valid jurisdiction to initiate and levy penalties under s. 271(1)(c) of the Act and that, therefore, the same should be upheld. For this, the learned departmental representative argued that it was satisfaction of the ITO in the course of the reassessment proceedings that the assessee had concealed the particulars of his income that would confer jurisdiction on the ITO to initiate penalty proceedings against the assessee under s. 274(1) of the Act and that the law as applicable at the time of such initiation of penalty proceedings should be followed for the purpose of following the procedure for levy of penalty. 14. Shri Ananthachar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that it will apply even to a case where the offence or infringement was committed prior to the amendment. Their Lordships also held that submission to the jurisdiction by an assessee will not confer any jurisdiction on an authority who have no jurisdiction at all. Their Lordships applied the earlier decision of the same High Court in CGT vs. C. Muthukumaraswamy Mudaliar (1975) 98 ITR 540 (Mad). In the said case the High Court held that as it was the law in force on 22nd Dec., 1970, when the return was filed in the said case that would be applicable s. 274(2) as it stood prior to its amendment on 1st April, 1971, was the relevant provision that was to be applied in the said case and hence the officer had no jurisdiction to levy penalty. 17. In my view, these two decisions clinch the issue in favour of the assessee for the first five years from 1965-66 to 1969-70. It would be seen from col. 2 of the tabular statement wherein the date of filing of the original return for each of these years is set out in para 4 supra the returns were filed on 4th Jan., 1967 and 26th Feb., 1970, respectively. It is, therefore, clear that the provisions of s. 274(2) as it stood before its amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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