RAMLAL KISHORE LAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions have been referred by the Income-tax Appellate Tribunal:

(2.) THE questions arise out of proceedings for the assessment year 1962-63. THE assessee is a registered firm. While taking assessment proceeding for the year 1961-62 the Income-tax Officer noticed some credit entries in the account of the assessee maintained in the books of M/s. Mirchand Nemichand, Guntur, which appear to relate to the years 1958-59 to 1962-63 and totalled Rs. 70,000. Out of this, he treated a sum of Rs. 12,000 as concealed income relating to the assessment year 1962-63 and made an assessment accordingly. In the assessment order he also noted that penalty proceedings under Section 271(1)(c) would be initiated separately in this respect. THEreafter, he sent a draft penalty order to the Inspecting Assistant Commissioner with the records of the case and proposed a penalty of Rs. 2,000. It seems that the office of the Inspecting Assistant Commissioner put up a note on August 3, 1963, stating:

(3.) SUBSEQUENTLY, it appears, the Commissioner of Income-tax issued a notice under Section 263(1) to the assessee calling upon him to show cause why the Income-tax Officer's order dated October 3, 1963, should not be cancelled. After hearing the assessee, the Commissioner made an order dated March 25, 1964, cancelling that order and directing that fresh orders should be passed in accordance with law. The Commissioner took the view that the penal proceedings were dropped by the order of the Income-tax Officer dated October 3, 1963, and he was competent to revise that order under Section 263(1). The note made by the Inspecting Assistant Commissioner, he said, was not an order under Section 271 and it could not be said that he was revising it.