GAYATHRI TEXTILES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE ITAT has referred the following questions of law arising out of its order dated 24th June, 1996, in respect of the assessment year 1986-87 :

(2.) THE facts of the case are that the assessee is a registered firm. It was the lessee of the premises where it was, in the past, carrying on its manufacturing and trading activities. THE assessee leased out the leasehold premises to Canara Bank, J. C. Road, Bangalore. For the year under consideration, the income of the assessee consisted of the difference in the rent it received and paid. THE assessee declared an income of Rs. 71,740. THE Assessing Officer determined the total income at Rs. 2,17,970. Penal proceedings under Section 271(1)(c) of the I. T. Act, 1961, were initiated and penalty of Rs. 17,520 was levied. On appeal, the first appellate authority cancelled the penalty holding that the Assessing Officer did not obtain the previous approval of the Inspecting Assistant Commissioner as required under Section 274(2) of the Act. On appeal by the Revenue, the Tribunal reversed the order of the first appellate authority holding that failure to obtain the previous permission from the Inspecting Assistant Commissioner for imposing penalty under Section 271(1)(c) is only a procedural error and it is not fatal to the order of penalty under Section 271(1)(c).

(3.) THE reference is answered in favour of the Revenue and against the assessee.