9911796707
TMI Blog1984 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ence may be briefly stated : M/s. Phusraj Gangabishan of Nokha, District Bikaner (hereinafter called " the assessee "), is a wholesale dealer in foodgrains. In its return of income relating to the assessment year 1965-66, the assessee fraudulently concealed part of its income and furnished inaccurate particulars of its income. Certain fictitious cash credit entries were shown, which were discovered during the course of assessment proceedings to represent the income of the assessee from undisclosed sources. The ITO, B-Ward, Bikaner, who was the assessing authority in relation to the assessee, while passing the order of assessment on April 14, 1967, held that the assessee had concealed part of its income and as such issued a notice to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted September 14, 1971, upheld the penalty imposed by the IAC. Thereafter, the assessee submitted an application under s. 256(1) of the Act before the Income-tax Appellate Tribunal, Jaipur Bench, seeking that a statement of the case be drawn up and three questions may be referred to this court for its opinion as arising out of the order of the Tribunal. The Tribunal held that questions Nos. 1 and 3, desired to be referred by the assessee, were questions of fact on the basis of which the Tribunal had arrived at the conclusion that the assessee had concealed its income and had furnished inaccurate particulars of its income. However, as regards the proposed question No. 2, the Tribunal held that it was question of law and after reframing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITO was required to refer the case to the IAC, on whom the powers regarding imposition of penalty were conferred by s. 274 of the Act, which was as under at the relevant time: "274. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling under clause (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Padgilwar Brothers v. CIT [1971] 81 ITR 258. In that case, the ITO, in his order of assessment, held that the assessee had concealed its income and had rendered itself liable for imposition of penalty under s. 271(1)(c) of the Act and stated that notice under s. 274(1) for concealment of income was being issued separately. The ITO, on the same day, issued a notice to the assessee under s. 274(1) read with s. 271 (1)(c) to show cause why penalty should not be imposed. Subsequently, the ITO referred the matter to the IAC, because the minimum penalty imposable exceeded Rs. 1,000. Thereafter, the IAC issued a notice under s. 274(1) and passed an order imposing penalty. The Bombay High Court in the aforesaid circumstances held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that is to be reached by the Income-tax Officer or the Appellate Assistant Commissioner regarding the concealment of income or other infraction enumerated in section 271(1) will obviously be in the course of proceedings pending before the Income-tax Officer. We, therefore, do not see any reason why the subsequent notice required to be given under section 274(1) to the assessee, who is found to have concealed income to show cause why penalty should not be imposed, cannot issue after the completion of the proceedings in which a satisfaction is reached by the Income-tax Officer that the case of concealment of income has been established. " A discordant note was struck by their Lordships of the Calcutta High Court in Ram Chandra Sarda v. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the proceedings in such a case cannot be initiated by the ITO because the satisfaction of the ITO in the course of assessment proceedings regarding the concealment of income constitutes the basis or foundation for the proceedings for levy of penalty. Their Lordships observed as under in the aforesaid case (p. 562): " The proceedings for the imposition of penalty in terms of sub-section (1) of section 271 have necessarily to be initiated either by the Income-tax Officer or by the Appellate Assistant Commissioner. The fact that the Income-tax Officer has to refer the case to the Inspecting Assistant Commissioner if the minimum imposable penalty exceeds the sum of rupees one thousand in a case failing under clause (c) of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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