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Sunderlal Jaiswal and Co. Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Jabalpur
Decided On
Judge
Reported in(1984)7ITD177Jab
AppellantSunderlal Jaiswal and Co.
Respondentincome-tax Officer
Excerpt:
.....the assessee challenged the rectification order under section 154 which directed the initiation of penalty proceedings under section 271(1).such order was not appealable as no penalty had been levied upon the assessee and it was merely an order for initiation of penalty proceedings.penalty under s. 271(1)(c)--validity--mention of initiation of proceedings in body of the assessment order.mention of initiation of proceedings in body of assessment ordered and not at the end was sufficient for initiating penalty proceedings.the words for initiation of penalty proceedings could be written anywhere in the assessment order and not necessarily at the end.therefore, in the given circumstances, penalty proceedings could be validly initiated.rectification under s. 154--mistake apparent--initiation.....
Judgment:
Rectification order directing initiation of penalty proceeding is not appealable.

Section 246 provides that an order under section 154 or 155 is appealable only when it has the effect of enhancing the assessment, reducing a refund or refusing to allow a claim under section 154 or 155. In the instant case, the assessee challenged the rectification order under section 154 which directed the initiation of penalty proceedings under section 271(1).

Such order was not appealable as no penalty had been levied upon the assessee and it was merely an order for initiation of penalty proceedings.

Penalty under s. 271(1)(c)--VALIDITY--Mention of initiation of proceedings in body of the assessment order.

Mention of initiation of proceedings in body of assessment ordered and not at the end was sufficient for initiating penalty proceedings.

The words for initiation of penalty proceedings could be written anywhere in the assessment order and not necessarily at the end.

Therefore, in the given circumstances, penalty proceedings could be validly initiated.

Rectification under s. 154--MISTAKE APPARENT--Initiation of penalty proceeding.

Initiation of penalty proceeding is stated in assessment order and non-mention of the same at the end of the order, is not a mistake apparent from records.

The initiation of penalty proceedings was clearly stated in the assessment order and it was not necessary that these words should appear at the end of the order. Therefore, there was no mistake which required rectification under section 154.

1. In this case, the assessment was completed on the assessee on 28-2-1978 and an addition of Rs. 14,000 was made to the total income as income from undisclosed sources. In para 2 of the assessment order, it was specifically mentioned that the penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 ('the Act') will be started for the purpose, but there was no such mention at the end of the order. The ITO, therefore, proposed to pass another order under Section 154 of the Act to rectify this mistake, to which the assessee's representative argued that he had no objection to the issue of such notice under Section 271(1)(c) and consequent rectification of mistake. The ITO, consequently, passed another order under Section 154 relating to the issue of notice under Section 271(1)(c). An appeal against this order has been dismissed by the AAC. The assessee has come up in second appeal before us.

2. We have heard the representatives of the parties at length in this appeal. On behalf of the assessee, it was contended that penalty provisions should be strictly construed and all penalties have to be initiated at the time of assessment and order for initiation of penalty cannot be passed after the assessment has been completed. Reference was made to a decision of the Delhi High Court in CIT v. Rajinder Kumar Somani [1980] 125 ITR 756, wherein a penalty notice was served upon the assessee after service of the assessment order and notice of demand and the finding of the Tribunal was that no action can be initiated in the course of the assessment proceedings. The High Court thereupon refused to interfere with this finding. We are afraid, we are not inclined to accept the assessee's contention raised in this behalf. Firstly, as the order of the ITO would show in para 2 of the assessment order itself, it was specifically mentioned that the penalty proceedings under Section 271(1)(c) would be started for this purpose. It is not necessary that the sentence should occur only at the end of the assessment order. The words can be written anywhere in the order, because the ITO has stated it in the course of the assessment proceedings. In fact, to our mind, a rectification was at all not necessary. Even if there was some improper drafting of the assessment order, the same shall not vitiate the same because of the provisions of Section 292B of the Act, according to which : No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of inome, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.

Secondly, a perusal of the rectification order would show that the same was passed with the consent of the assessee. The AAC has also observed that the assessee was not aggrieved and could not possibly be aggrieved by the mere issue of a notice. The cause of action or grievance would arise when the penalty is levied in fact. In Ramanlal Kamdar v. CIT [1977] 108 ITR 73 (Mad.), it was held that where revision of assessment is agreed to by the assessee, he would not be entitled to go in appeal to the AAC or in further appeal to the Tribunal. In CIT v. Ramjibhai Hirjibhai & Sons [1977] 110 ITR 411 (Guj.) charging of interest under Section 139 of the Act for late submission of the return was held to be allowable by an order under Section 154. In any case, the present order seeking to rectify the assessment order under Section 154 was not at all appealable to the AAC. According to Section 246, Clause (1)(f) of the Act, an order under Section 154 or 155 of the Act is appealable only when it has the effect of enhancing the assessment, reducing a refund or refusing to allow a claim made by the assessee under either Section 154 or 155. A direction for initiation of penalty proceedings under an order under Section 154 is not appealable. What had happened in the Delhi High Court case cited by the assessee, namely, Rajinder Kumar Somani's case (supra) was that a penalty had been levied in pursuance of the order passed under Section 154 and the High Court ultimately upheld the deletion of the penalty. In the present case, no penalty has been levied upon the assessee so far.and, therefore, no appeal against an order simply initiating the penalty can lie. In fact, even in respect of the quantum appeal, the appellate authorities do not interfere with the order initiating the penalty even if they do modify the assessment itself.

3. In view of these observations, the present appeal is hereby dismissed.


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