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TMI Blog1984 (11) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... s applicable to the assessment order, wherein penalty proceedings were initiated under section 273(2)(aa). 3. The Commissioner (Appeals) erred in holding that he has powers under the Act to give the assessee an opportunity to submit reasons as regards why penalty under section 273(2)(a) should not be levied on it. 2. Before proceeding with the merits of the case, it is very relevant to set out the following facts : Notice under section 210 of the Act was issued to the assessee on 2-6-1978 and the same was served on the assessee on 13-6-1978, showing the estimated income at Rs. 1,10,160 and tax at Rs. 58,431. The assessee filed Form No. 28A on the same day, that is, on 13-6-1978, showing estimated total income at Rs. 3,08,990 and tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst this order of the ITO, the assessee went up in appeal before the Commissioner (Appeals). 3. The learned counsel for the assessee contended before the Commissioner (Appeals) that the order of the ITO was illegal and void for the following reasons : 1. The ITO had no jurisdiction to initiate proceedings under section 273(2)(aa), which was not the provision applicable to this case and, therefore, the initiation was not proper and the entire proceedings are vitiated. 2. Though the proceedings were initiated under section 273(2)(aa), the penalty was levied under section 273(2)(a). Therefore, there was no opportunity for the assessee to explain its case and the penalty is vitiated. 3. Section 292B would not come to the aid of the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel that the ITO could not do this ; but I disagree when he says that this is a fatal defect which nullifies the order. I would hold that this was a procedural defect, which could be rectified by recommencing the proceedings from the stage at which the procedural irregularity supervened---Guduthur Bros. v. ITO [1960] 40 ITR 298 (SC). The third question will be, whether I can now consider the assessee's explanation and deal with the penalty. I feel that I can do so, in view of the decisions in the case of V. Subramonia Iyer v. CIT [1978] 113 ITR 685 (Ker.). With the aforesaid finding, the Commissioner (Appeals) confirmed the penalty levied by the ITO ; as against this order of the Commissioner (Appeals), the assessee is before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m so that they might be given an opportunity of being heard : " On the aforesaid facts, their Lordships of the Supreme Court have held : ". . . that as the Appellate Assistant Commissioner pointed out only to an illegality which vitiated the proceedings after they were lawfully initiated, the notice issued under section 28(1)(a) did not cease to be operative and it was open to the Income-tax Officer to take up the matter at the point at which the illegality supervened and to correct his proceedings.... The Income-tax Officer had jurisdiction to continue the proceedings from the stage at which the illegality had occurred." If the ratio laid down in the aforesaid case is correctly applied to the facts of this case, what the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance and effect in conformity with or according to the intent and purpose of this Act." For the aforesaid section to apply, there should be a mistake, defect or omission in the notice issued by the ITO. The mistake is one, which happens casually and it should be a mistake, pure and simple. In the case under consideration before us, when the ITO has issued a second notice to the assessee, under section 273(2)(aa), it was specifically brought to the notice of the ITO by the assessee, by its letter dated 16-9-1982, that since the assessee had not filed a higher estimate at all, penalty could not be levied on it under section 273(2)(aa). If the ITO has really committed a mistake, at least at this stage, after the receipt of the reply from th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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