BHOOMAREDDY BROTHERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE are references under section 256(1) of the Income-tax Act on the following question of law :

(2.) THE assessee was an association of persons. For the assessment years 1959-60, 1960-61 and 1961-62, the Income-tax Officer levied penalty under sections 271(1)(a) and 273(b) of the Income-tax Act, 1961. In appeals against that order of the Income-tax Officer to the Appellate Assistant Commissioner as well as the Tribunal, it was held that the provisions of the Income-tax Act, 1961, were not applicable to the assessment years in question and the penalty levied was unauthorised. It was accordingly set aside. On a reference to this court in I.T.R.C. Nos. 32 to 37 of 1968, the High Court held that penalty could be validly levied for the assessment years in question under section 271(1)(a) and under section 273(b) of the Income-tax Act, 1961.

(3.) AGAINST the said order of the Appellate Assistant Commissioner, the assessee preferred appeals to the Appellate Tribunal. Before the Tribunal, it was urged that the Appellate Assistant Commissioner has no jurisdiction to enhance the penalty after the decision of this court in I.T.R.C. Nos. 32 to 37 of 1968. It was also urged that on the merits of the matter, the Income-tax Officer ought not to have levied the penalty since the assessee had not disregarded the obligations under law. On both the contentions, the Tribunal found no substance. The Tribunal found that the Income-tax Officer failed to work out the correct quantum of minimum penalty as prescribed under sections 271(1)(a) and 273(b) of the Income-tax Act, 1961, and the decision of this court in the earlier I.T.R.C. Nos. 32 to 37 of 1968 was no bar for the Appellate Assistant Commissioner to enhance the penalty to bring it in conformity with the statutory provisions. On the merits of the matter, the Tribunal held that the assessee had consciously disregarded its obligations under the law and, therefore, penalty levied was justified.