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TMI Blog1976 (7) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... the income returned and the income assessed or by reference to the amount concealed? (4) Whether, on the facts and in the circumstances of the case, and in view of the order of the Tribunal in I.T.A. No. 11700 of 1960-61 the assessment order for the year 1954-55 dated July 31, 1957, in so far as it related to the income from business in the name of Chhaganlal Velji Co. could be said to be an order completed on or after the 1st April, 1962, giving rise to the jurisdiction of the Inspecting Assistant Commissioner to levy a penalty under section 271(1)(c) ? At the outset it may be stated that Mr. Mehta, appearing for the assessee, has not pressed questions Nos. 1 and 3 in view of the fact that these have been covered by the decisions of the Supreme Court. In view of the decision of the Supreme Court in the case of Jain Brothers v. Union of India reported in [1970] 77 ITR 107 (SC) question No. 1 is not pressed and, therefore, the same is not answered. Similarly, in view of the Supreme Court decision in the case of Mansukhlal and Brothers v. Commissioner of Income-tax [1969] 73 ITR 546 (SC) question No. 3 is also not pressed and the same is not answered. As regards questions Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order of the Income-tax Officer and remanded the matter to enable him to scrutinise the items taking into account the relevant facts and considering the claim according to law. Thereafter, the Income-tax Officer made a fresh assessment on July 20, 1963, making an addition of Rs. 10,000 on account of bad debts once again. In other words, after examining the relevant material that was produced before him the Income-tax Officer reiterated his earlier view that these items were required to be added or included in the income of the assessee. While passing his assessment order dated July 20, 1963, he directed that notice under section 274(1) for default under section 271(1)(c) for furnishing wrong particulars be issued. On July 25, 1963, a regular notice to show cause why the penalty should not be imposed was issued and served on the assessee and the case was then referred to the Inspecting Assistant Commissioner, who by his order dated May 5, 1965, levied a penalty of Rs. 18,000 under section 271(1)(c) by reference to two items, Rs. 28,747 being profit in the name of Chhaganlal Velji Co. and Rs.10,000 on account of bad debts. The question of disallowance of bad debts was, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself that the penalty proceedings were required to be initiate and he had directed notice under section 28(3) of the old Act to be issued against the assessee. That being the position on facts, he contended that the penalty proceedings having been initiated under the old Act by the Income-tax Officer the same ought to have been continued and completed under the old Act and not under the new Act and, therefore, the penalty actually imposed by the Inspecting Assistant Commissioner, levying penalty of Rs. 18,000 under the new Act, was bad in law. It is not possible to accept this contention of Mr. Mehta for the reasons which we shall presently indicate. In respect of his contention reliance was placed by Mr. Mehta upon clause (f) of sub-section (2) of section 297 of the Income-tax Act, 1961. The question is whether the instant case falls under clause (f) or (g) of sub-section (2) of section 297 and, therefore, it will be desirable to set out both the clauses. By section 297(1) the Indian Income-tax Act, 1922, has been repealed and sub-section (2) of section 297 provides for certain savings as indicated therein and that provision runs as follows: "297. (2) Notwithstanding the rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer on July 31, 1957, and not only had the order been set aside but the Tribunal had sent the matter back to the Income-tax Officer "to enable the Income-tax Officer to scrutinise the above items (items pertaining to bad debts) taking into account the relevant facts and consider the claims according to law". It is true that in regard to these items pertaining to bad debts that the initial assessment order was set aside and the matter was remanded back and it is also true that in fact the inclusion of Rs. 28,747 had been confirmed by the Tribunal. But all the same, the initial assessment order having been set aside and the matter having been remanded back to the Income-tax Officer it can never be said that the assessment of the assessee was completed before 1st April, 1962, for it was after such remand that the Income-tax Officer took fresh evidence, considered the items which he was directed to consider and after considering the fresh material that was placed before him he passed fresh assessment order on July 20, 1963. It may be stated that this order dated July 20, 1963, has been in terms passed by the Income-tax Officer under section 23(3) consequent to the order under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer made his assessment orders and section 297(2)(f) which makes the Act of 1922 applicable for levying the penalty will govern and not section 297(2)(g). In our view, this decision is not of much assistance to Mr. Mehta, for, on facts, there is no similarity between the instant case before us and the case decided by the Kerala High Court. In the first place, there does not appear to be any reversal or setting aside of the Income-tax Officer's order by the Appellate Tribunal in the case before the Kerala High Court, whereas in the instant case before us the Income-tax Officer's order dated July 31, 1957, has actually been set aside by the Tribunal and the matter was remanded back to the Income-tax Officer for disposal of the matter according to law after the directions were given to him to deal with the two items of bad debts, the finding of the Income-tax Officer in respect of which was not accepted by the Tribunal. Secondly, even while taking the view that the assessment must be deemed to have been completed when the Income-tax Officer passed his initial order and not when the Appellate Tribunal disposed of the matter finally, the Kerala High Court has made some significant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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