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Appejay Steel Works Private Ltd. Vs. Inspecting Assistant Commissioner of Income-tax (Central), Range-i and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 837(W) of 1971
Judge
Reported in[1976]103ITR806(Cal)
ActsIncome Tax Act, 1961 - Sections 142(1), 143(2), 271(1) and 274
AppellantAppejay Steel Works Private Ltd.
Respondentinspecting Assistant Commissioner of Income-tax (Central), Range-i and ors.
Appellant AdvocateDebiprosad Pal and ;Anil Kanti Roy Chowdhury, Advs.
Respondent AdvocateA.K. Sengupta and ;R.N. Mitra, Advs.
Cases ReferredD. M. Manasvi v. Commissioner of Income
Excerpt:
- .....said assessment was completed on the 18th march, 1969. therein it was observed as follows :'.....penalty notice under section 274 read with section 271(1)(c) of concealing true particulars of income has already been issued. penalty notice under section 274 read with section 271(1)(b) for non-compliance of notice under section 142(1) or 143(2) has also been issued.....' 3. thereafter, it appears the case of the petitioner was transferred to the income-tax officer, central circle-v. the said officer on the 5th june, 1970, issued the notice which is as follows:'whereas in the course of proceedings before me for the assessment year 1964-65 it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income and whereas the.....
Judgment:

Sabyasachi Mukharji, J.

1. The subject-matter of challenge in this application under Article 226 of the Constitution is the notice dated the 10th February, 1971, issued under Section 274(2) read with Section 271 of the Income-tax Act, 1961, for the assessment year 1964-65 by the Inspecting Assistant Commissioner of Income-tax (Central), Range-I, Calcutta. In the impugned notice the Inspecting Assistant Commissioner of Income-tax (Central), Range-I, has stated as follows:

'Whereas the Income-tax Officer, Central Circle-V, Calcutta, has under Sub-section (2) of Section 274 of the Income-tax Act, 1961, referred your case to me in connection with the penalty proceedings under Clause (c) of Sub-section (1) of Section 271 and whereas it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income for the assessment year 1964-65.

You are hereby requested to appear before me at 11.30 A.M. on February 24, 1971, and show cause why an order imposing a penalty on you should not be made under Section 271(1)(c) of the said Act. If you do not wish to avail yourself of this opportunity of being heard in person or through authorised representative you may show cause in writing on or before the said date which will be considered before any such order is made under Section 271(1)(c).....'

2. It was contended that the Inspecting Assistant Commissioner of Income-tax (Central), Range-I, Calcutta, had no jurisdiction and no authority to issue the impugned notice. It appears that the assessment for the assessment year 1964-65 was completed by the Income-tax Officer, 'A' Ward, Jullundur. The said assessment was completed on the 18th March, 1969. Therein it was observed as follows :

'.....Penalty notice under Section 274 read with Section 271(1)(c) of concealing true particulars of income has already been issued.

Penalty notice under Section 274 read with Section 271(1)(b) for non-compliance of notice under Section 142(1) or 143(2) has also been issued.....'

3. Thereafter, it appears the case of the petitioner was transferred to the Income-tax Officer, Central Circle-V. The said officer on the 5th June, 1970, issued the notice which is as follows:

'Whereas in the course of proceedings before me for the assessment year 1964-65 it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income and whereas the penalty proceedings have to be referred to the Inspecting Assistant Commissioner of Income-tax. According to Subsection (2) of Section 274 of the Income-tax Act, 1961, you are hereby informed that the case for levy of a penalty under Section (under Clause (c) of Subsection (1) of Section 271) is being referred by me to the Inspecting Assistant Commissioner of Income-tax, Range-I(c), Calcutta. Further proceedings in regard to the levy of a penalty will take place before the said Inspecting Assistant Commissioner of Income-tax as provided in Sub-section (2) of Section 274.'

4. It is manifest that the Income-tax Officer was satisfied during the course of the assessment proceeding about the need for imposition of penalty. The assessment order records that fact. What is required under the Act is satisfaction before the conclusion of the proceeding and not issue of any notice or initiation of any step for imposing penalty. Reliance in this connection may be placed on the observations of the Supreme Court at page 745 of the report in the case of Commissioner of Income-tax v. S. V. Angidi Chettiar, : [1962]44ITR739(SC) . It is clear that after the assessment was completed the case was transferred before further steps had been taken for issue of notice for penalty and it is for this reason that no notice was issued by the Income-tax Officer, 'A'-Ward, Jullundur, referring the case to the Inspecting Assistant Commissioner of Income-tax. Similarly, no notice by the Inspecting Assistant Commissioner of Income-tax, who had jurisdic-tion over the Income-tax Officer, 'A'-Ward, Jullundur, was issued. Thereafter, the case having been transferred to the Income-tax Officer, Central Circle-V, he referred the matter to the Inspecting Assistant Commissioner of Income-tax (Central), Range-I, Calcutta, and he was of the opinion that the penalty imposable was more than Rs. 1,000. It is true that the use of the expression 'whereas in the course of proceedings before me for the assessment year 1964-65, it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income' is rather unhappy and inaccurate. In the course of the assessment proceeding before the conclusion of the proceeding it has appeared to the Income-tax Officer that the petitioner was guilty of concealment of the particulars of income or of deliberately furnishing inaccurate particulars. What the Income-tax Officer should have observed was that he was of the opinion that the matter should be referred to the Inspecting Assistant Commissioner of Income-tax as the minimum penalty imposable was likely to exceed Rs. 1,000. But the said inappropriate use of language does not, in my opinion, in the facts and circumstances of the case, invalidate the issue of the notice. The notice was issued subsequent to the making of the assessment by the transferee-Income-tax Officer, and such subsequent issue of the notice does not, in my opinion, indicate that the satisfaction was not during the course of the assessment proceeding. Reliance in this connection may also be made on the observations of the Supreme Court at page 561 of the report in the case of D. M. Manasvi v. Commissioner of Income-tax, : [1972]86ITR557(SC) .

5. In the aforesaid view of the matter, the challenge to the notice cannot be sustained. The application accordingly fails and is dismissed.

6. The rule nisi is discharged.

7. There will be no order for costs.

8. Interim order, if any, is vacated.

9. Let there be stay of operation of this order for six weeks from date.


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