9911796707
TMI Blog1990 (12) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... neness of the hundi loans, the Tribunal was justified in cancelling the entire penalty under section 271(1)(c) of the Act for the assessment years 1964-65,1965-66 and 1966-67 ?" The assessee is a company deriving its income mainly from managing agency and dividends. For the assessment years 1964-65, 1965-66 and 1966-67, the assessee filed returns of income disclosing Rs. 4,32,517, Rs. 5,79,918 and Rs. 9,13,836, respectively. In the course of the assessment proceedings, it was found that the assessee had claimed loss of Rs. 70,350 and Rs. 1,00,006 respectively for the assessment years 1964-65 and 1965-66 in the spun pipe plant. Likewise, excess remuneration paid to a financial adviser in a sum of Rs. 24,000 for the assessment years 1964-65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remuneration claimed to have been paid to the financial adviser for the assessment years 1964-65 and 1965-66 and the hundi loans with interest and brokerage for all the assessment years and by invoking the Explanation to section 271 (1) (c) of the Act, the Inspecting Assistant Commissioner levied penalty as shown below: Rs. For the assessment year 1964-65 : 1,15,000 For the assessment year 1965-66 : 72,000 For the assessment year 1966-67 : 28,112 On appeal by the assessee before the Tribunal, it took the view that no penalty was leviable in respect of the disallowance of the loss in the spun pipe plant in view of its earlier order in I. T. A. NO. 628/MDS/69-70, dated May 31, 1967. Considering the additions on account of the hundi cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner, pursuant to the remit order made by the Tribunal, the Tribunal was not justified in examining the question of levy of penalty on merits and in cancelling the same. As pointed out by a Division Bench of this court in CIT v. Hind Mercantile Corporation (In liquidation) [1989] 177 ITR 149, in order to enable the penalty proceedings to survive the assessment proceedings should be alive and, inasmuch as the assessment in this case had been set aside in part and the matter had been remitted to the Appellate Assistant Commissioner for de novo consideration, the penalty proceedings could not have been terminated in the manner done by the Tribunal by the cancellation of the penalty levied. The question whether penalty was leviable or not, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be considered only in the light of the assessment to be made on the assessee pursuant to the directions given by the Tribunal while setting aside the assessment order. As the Tribunal was fully aware of the circumstance that it had set aside the assessment order in an appeal preferred by the assessee, it follows that the question of levy of penalty remained to be considered on the basis of the assessment to be made pursuant to the directions given by the Tribunal after setting aside the assessment already made and remitting the matter to the Appellate Assistant Commissioner. In other words, when the assessment pursuant to the directions of the Tribunal remained to be completed, there is no question of either levy of penalty or of cancel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, in Seshasayee Paper and Boards Ltd. v. IAC of I. T. [1986] 157 ITR 342 (Mad), it has been pointed out that even a wrong order has a finality and, unless that finality is disturbed by a process known to law or by a process authorised by law, the rights of the assessee and the Revenue will continue to be governed by the order. We are, therefore, of the view that, on the facts and circumstances of the case, the Tribunal was in error in having cancelled the penalty levied for the assessment years 1964-65, 1965-66 and 1966-67. We, therefore, answer the questions referred to us in the negative and in favour of the Revenue. We may also observe that, depending upon the outcome of the pending assessment proceedings, it would be open to the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
