Bhagwan Dass Vijay Kumar vs Commissioner of Income Tax

B.S. Dhillon, J.—The assessee is an HUF. The assessment year is 1964-65. The assessee filed the return of income on July 29, 1966, declaring income of Rs. 1,971. The assessment originally came to be made on March 17, 1969, whereby the total income was determined at Rs. 92,462. Penalty proceedings u/s 271(1)(c) of the income tax Act (hereinafter referred to as "the Act") were initiated at the time of completing the assessment. The assessee filed an appeal against the assessment order which was accepted and the AAC directed the ITO to reframe the assessment afresh in accordance with law. Consequently, the penalty proceedings u/s 271(1)(c) of the Act, which were initiated on the basis of his first order were dropped by the IAC.

The revised assessment was made and the total income was determined at Rs. 36,360. The assessee''s appeal was accepted and the amount of undisclosed income was reduced by Rs. 7,320. The Revenue filed an appeal before the income tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as "the Tribunal"), on which the Tribunal restored the addition of Rs. 24,000 in respect of certain credits, which amount was held to have been explained by the AAC.

Penalty proceedings were initiated at the time of completing the reassessment/fresh assessment proceedings and as the minimum penalty, imposable exceeded Rs. 1,000, the matter was referred to the IAC. The IAC held that the Explanation to section 271(1)(c) of the Act was applicable. He, therefore, levied a penalty of Rs. 5,000. The Tribunal, in appeal, held that the penalty u/s 271(1)(c) was exigible. The quantum of penalty was, however, reduced to Rs. 3,000.

At the instance of the assessee, the following question of law has been referred to this court for its opinion:

Whether, on the facts and in the circumstances of the case, particularly in view of the Inspecting Assistant Commissioner''s order dated January 13, 1971, dropping penalty proceedings, the Tribunal was right in law in holding that penalty u/s 271(1)(c) could be levied in reassessment proceedings?

After hearing the learned counsel for the parties and taking into consideration the provisions of section 271 of the Act, we are of the opinion that no fault can be found with the view taken by the Tribunal. The penalty proceedings were initiated on the basis of the first assessment order. The said assessment order was set aside by the AAC and a fresh assessment was ordered. The penalty proceedings were dropped in view of the order of the AAC. On fresh assessment order having been passed and, ultimately, the Tribunal having come to the conclusion that there was concealment of income, the initiation of the penalty proceedings on the basis of the fresh assessment order cannot be held to be without jurisdiction. The provisions of section 271(1) are wide enough to include any type of proceedings under the Act which may include the proceedings on the basis of a remand order. For the reasons recorded above, the question of law referred to this court for its opinion is answered in the affirmative, i.e., against the assessee and in favour of the Revenue. The costs will follow the event.

Gokal Chand Mittal, J.

I agree.