COMMISSIONER OF INCOME TAX Vs. INDIA HOTEL NAINITAL

JUDGEMENT

(1.) AT the instance of the CIT, the Income -tax Appellate Tribunal, Delhi Bench, has stated the case and referred the following question for the opinion of this court I

(2.) THE assessee, M/s. India Hotel, Nainital, was assessed to income -tax on 16th August, 1966. The ITO formed an opinion that as the assessee had concealed the particulars of its income and had furnished inaccurate particulars thereof, minimum amount of penalty imposable upon it was Rs. 1,000. Accordingly, as required by Section 274(2) of the I.T. Act, he referred the case to the IAC for imposing such penalty as he thought proper. It appears that while the penalty proceedings were pending before the IAC, the assessee filed an appeal against the assessment order dated August 16, 1966. The AAC allowed the appeal filed by the assessee in part and reduced its taxable income by a sum of Rs. 3,000. Consequently, the minimum penalty imposable on the assessee came to less than Rs. 1,000. However, the IAC concluded the penalty proceedings and by his order dated July 23, 1968, imposed upon the assessee a penalty of Rs. 1,000 under Section 271 of the I.T. Act. Being aggrieved by the aforesaid order of the IAC, the assessee preferred an appeal before the Income -tax Appellate Tribunal, Delhi Bench. The I.T. Appellate Tribunal, by its order dated 20th May, 1970, allowed the appeal and set aside the order of the IAC dated July 23, 1968, on the ground that as the effect of the order dated October 16, 1967, passed by the AAC was that minimum amount of penalty imposable upon the assessee became less than Rs. 1,000, the IAC ceased to have jurisdiction to deal with the penalty proceedings. Subsequently, at the instance of the CIT, the Tribunal stated the case and referred the aforesaid question for the opinion of this court.

(3.) AFORESAID view expressed by us is further supported by a subsequent amendment made in Section 274(2) of the I.T. Act. Relevant portion of the amended Section 274(2) of the Act runs thus: