INCOME TAX OFFICER Vs. INCOME TAX APPELLATE TRIBUNAL

JUDGEMENT

(1.) THIS is a writ petition by the department under article 226 of the Constitution challenging the jurisdiction of the Income -tax Appellate Tribunal to reduce the penalty levied by passing an order under section 35 of the Income -tax Act, 1922 (hereinafter referred to as the Act). The facts leading up to this writ petition are thes :

(2.) THE assessee (respondent No. 2) was a partnership firm which carried on business with its head office in Dehra Dun. Its business consisted of the selling agency of Tata Mercedes Diesel Oil trucks and in the purchase and sale of motor parts and accessories. For the purpose of assessment the case of the aforesaid firm fell within the jurisdiction of the Income -tax Officer, B -Ward, Dehra Dun, prior to its transfer to the charge of the Income -tax Officer, A -Ward, Dehra Dun (petitioner No. 1). The Income -tax Officer, B -Ward, Dehra Dun, who made the assessment against the assessee for the assessment year 1960 -61, discovered that the assessee had suppressed its income by a sum of Rs. 41,740 which the assessee had claimed as expenditure on account of insurance premia paid by it to various insurance companies on behalf of its numerous customers. The amount realised by the assessee from its customers towards the insurance premia was not recorded in its books of accounts.

(3.) THE assessee filed an appeal against the aforesaid order to the Appellate Assistant Commissioner of Income -tax, Dehra Dun. The Appellate Assistant Commissioner by his order dated September, 5, 1962, confirmed the levy of penalty and dismissed the assessees appeal. Thereupon, the assessee filed a second appeal before the Income -tax Appellate Tribunal under section 33 of the Act. The appeal was heard by a Bench of the Income -tax Appellate Tribunal at Delhi, known as Bench A, on the 1st of August, 1963, and by its order dated the 6th of August, 1963, dismissed the assessees appeal. This order read :