Commissioner of Income Tax vs Jagannath Pd. Nankoo Pd.

This is an Income Tax reference u/s 256 of the Income Tax Act, 1961, in which the following three questions have been referred for our opinion :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing the application of the assessee filed by it before the Income Tax Officer u/s 146 of the Income Tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was prevented by sufficient cause in not complying with the terms of notice u/s 148 of the Income Tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the penalty imposed by the Income Tax Officer on the assessee u/s 271(1)(a) of the Income Tax Act, 1951 ?"

We have heard Sri Shekhar Srivastava, for the Department, and Sri Vikram Gulati, for the assessee. The relevant assessment year is 1962-63 in which the income assessed by the Income Tax Officer was Rs. 83,700, but it was ultimately reduced to Rs. 54,111 by the Tribunal, Proceedings u/s 148 were initiated and a reassessment order was passed and penalty imposed. The appeal of the assessee before the Appellate Assistant Commissioner failed, but in further appeal the Tribunal held that there was no valid notice u/s 148 served on the assessee and the condition precedent for issuing notice u/s 142(1) was lacking. These are findings of fact and hence we cannot in advisory jurisdiction (sic). We may also refer to a decision of this court in the case of Addl. Commissioner of Income Tax Vs. Prem Kumar Rastogi, , where it has been held that notice on an unauthorised person is not valid.

As regards the first question, it has also to be decided in favour of the assessee in view of the findings of the Tribunal. Thus all the three questions are answered in the affirmative, i.e., in favour of the assessee and against the Department.