GANESH DASS RAM GOPAL Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) FOR the assessment year 1970-71 while finalising the assessment the ITO came to the conclusion that the assessee had concealed particulars of its income. Since the minimum penalty leviable exceeded Rs. 25.000 he referred the case to the IAC under Section 274(2) of the I.T. Act. From the regular assessment the assessee preferred an appeal which was decided partly in its favour. On appeal by the Department, the Income-tax Appellate Tribunal by its order dated July 23, 1976, came to the conclusion that the assessee had suppressed particulars of the income of Rs. 81,000 odd. Thereafter, the petitioner moved an application to the Tribunal under Section 256(1) of the Act.

(2.) IN response to the notice issued by the IAC under Section 274(1) the assessee submitted a written explanation. The IAC by his order dated January 24, 1977, imposed a penalty of Rs. 81,000. Against the aforesaid order of the IAC the assessee filed an appeal before the INcome-tax Appellate Tribunal, Allahabad. The Tribunal decided the appeal by its order dated 21st September, 1978, reducing the penalty to Rs. 52,799. The petitioner thereupon filed a reference application before the Tribunal under Section 256(1) of the Act against the order dated 21st September, 1978, which is still pending. The petitioner also made an application under Section 254(2) for recalling the order dated 21st September, 1978. The stand taken was that Section 274 had been amended with effect from April 1, 1976, by the T.L. (Amend.) Act 1975, as a consequence of which the IAC had no jurisdiction to impose penalty. The Tribunal dismissed the application by its order dated July 27, 1979, observing that there was no mistake apparent on the face of the record which could be rectified in exercise of the power under Section 254(2) of the Act,

(3.) LEARNED counsel for the Department contended that the petition was highly belated and it was not a fit case for interference by this court. It is true that the impugned order of the IAC was passed on January 24, 1977, and the appellate order of the Tribunal on September 21, 1978, but the petitioner has put forward a plausible explanation for the delay in approaching this court. It has been stated that on account of wrong legal advice the assessee challenged the order of the IAC before the Tribunal when in fact no appeal under Section 253 lay to the Tribunal against the impugned order of the IAC. It was only when it was discovered that the remedy sought for by the petitioner was not in accordance with law that it was decided to approach this court under Article 226 of the Constitution. We see no reason to doubt the bona fides of the petitioner. The petitioner was taking steps for setting aside the order imposing penalty but on account of mistaken legal advice a wrong course was adopted. Since we are satisfied, that the wrong procedure adopted by the petitioner was on account of bona fide mistaken legal advice, it should not be penalised for approaching this court late.