COMMISSIONER OF INCOME TAX Vs. MANILAL TARACHAND

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Ahmedabad Bench 'A', has referred the following question for the opinion of this court :

(2.) THE assessee is an individual. For the assessment year 1973 -74, the relevant accounting period is Samvat Year 2028. The Income -tax Officer assessed the assessee under section 143(3), read with section 147(a) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'). In the reassessment order, the Income -tax Officer brought to tax long -term capital gains in relation to the compensation (including solatium) received, in the land acquisition proceedings, which admittedly the assessee had not disclosed in his return of income for the year under consideration.

(3.) THE Commissioner of Income -tax, Rajkot, initiated proceedings under section 263 of the Act stating that the assessment order framed on March 8, 1985, under section 143(3), read with section 147 of the Act was erroneous and prejudicial to the interests of the Revenue as the Income -tax Officer had failed to mention the point regarding initiation of penalty, proceedings under section 271(1)(c) of the Act on account of concealment of income or furnishing inaccurate particulars of income. The assessee resisted the notice for revision on two -fold counts. Firstly, it was contended that the provisions of section 263 did not empower the Commissioner of Income -tax to assume jurisdiction on account of failure to initiate penalty proceedings at the time of the assessment. Secondly, it was contended that in view of the facts and circumstances of the case, it could not be said that the assessee had concealed or furnished inaccurate particulars of income for which penalty proceedings could be initiated. The Commissioner of Income -tax did not accept the submissions made on behalf of the assessee and relying upon the decisions of the Madhya Pradesh High Court in the cases of Addl. CIT v. Kantilal Jain : [1980]125ITR373(MP) and Addl. CIT v. Indian Pharmaceutical : [1980]123ITR874(MP) held that it was open to him to act under section 263 of the Act when the Income -tax Officer had failed to initiate the penalty proceedings. The Commissioner of Income -tax also further held that the assessee had furnished inaccurate particulars of income in so far as he had failed to disclose the fact of the property being notified for the purposes of acquisition and thus becoming entitled to compensation.