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TMI Blog1984 (1) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ere valid notices when no subsequent opportunity was allowed to the assessee of being heard before imposition of the penalties ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of the Appellate Assistant Commissioner ? " The assessee is a registered firm and its return of income for the assessment year 1959-60 was due on January 20, 1960, in accordance with a notice under s. 22(2) of the Indian I.T. Act, 1922 (hereinafter referred to as the " 1922 Act "), which was in force at the relevant time. The assessee did not file its return of income for the aforesaid assessment year within time. But the return was filed on December 30, 1961, declaring a loss of Rs. 26,276 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by orders dated March 5, 1966. The assessee filed appeals against the orders imposing penalties upon it and the said appeals were allowed by the AAC by his order dated July 8, 1969, on the ground that the orders passed by the ITO imposing penalties were vitiated on account of non-observance of the provisions of s. 274(1) of the 1961 Act. The AAC remanded the matter to the ITO with a direction to complete the penalty proceedings after giving the assessee an adequate opportunity of hearing, so as to enable the assessee-firm to put forward the facts and circumstances leading to the defaults for which penalties were imposed and also to plead justification for such defaults. The ITO, A-Ward, Sri Ganganagar, filed an appeal against the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g directions: " It is necessary that these contentions of the assessee are considered at the proper stage and for this purpose, we would restore the appeals to the file of the Appellate Assistant Commissioner and direct him to dispose of them afresh, after hearing the assessee on the merits of the contentions with regard to the reasonable cause which prevented the assessee from filing the return within time and the sufficient cause for not filing the estimate under section 18A(3). " (now section 212). The assessee-firm submitted a reference application before the Tribunal requiring it to draw up a statement of the case and refer questions of law arising out of its order dated October 30, 1971, to this court for its opinion and that is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires that the assessee should be given a hearing or at least a reasonable opportunity of hearing before an order imposing penalty is passed. However, as in the present case, the Tribunal has given directions to the AAC to afford the assessee-firm full opportunity of hearing and to plead justification or sufficient cause for the defaults, it appears to be wholly unnecessary for us to go into the question whether the Tribunal was justified in setting aside the order of the AAC. The purpose and intent of the provisions of s. 274(1) are that the assessee should have full opportunity of hearing before penalty is levied upon him. As the Tribunal has ensured that the assessee shall be afforded a reasonable opportunity of hearing by the AAC and has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple that fiscal statute should be construed strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions. Their Lordships of the Supreme Court have approved the view taken by the Bombay High Court in CIT v. Kishoresinh Kalyansinh Solanki [1960] 39 ITR 522. That decision was followed by the Gujarat High Court in Vasani and Co. v. CIT [1978] 112 ITR 819 and by the Calcutta High Court in Bhagirathi Devi Jalan v. CIT [1978] 112 ITR 534 and the Madhya Pradesh High Court in Mohd. Shafi Khan v. CWT[1983] 144 ITR 489. On the other hand, the decision of the Assam High Court in CIT v. Sabitri Devi Agarwalla [1970] 77 ITR 934 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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