COMMISSIONER OF INCOME TAX Vs. BHUTANI ENTERPRISES

JUDGEMENT

(1.) THE few facts which are necessary to be stated for the purpose of this reference are that on a revised return filed on February 5, 1970, by the assessee declaring a total income of Rs. 72,682, the ITO by his assessment order dated March 20, 1970, made under S. 143(3) of the IT Act, 1961, determined the total income at about Rs. 1,21,000 and he initiated penalty proceedings under s. 271(1)(a) and (c) of the Act. After the ITO issued a show cause notice under S. 274(1) of the Act and there was no response from the assessee to the said show cause notice, the ITO issued another show cause notice under S. 274(1) to the assessee stating therein that the case was being referred to the IAC and he sent a copy of that notice to the IAC. The IAC further issued a show cause notice to the assessee under S. 274(1) and he imposed a penalty of Rs. 30,000. It is common ground that the reference made to the IAC was made on the footing that the minimum penalty imposable was Rs. 12,096 which was 20 per cent. of the amount of the tax sought to be evaded and that was also the basis on which the IAC proceeded to impose the penalty. The IAC holding that the assessee had concealed particulars of his income imposed a penalty of Rs. 30,000.

(2.) IN the assessee's appeal before the Tribunal, the Tribunal took the view that as the IAC had assumed jurisdiction on the footing that the minimum penalty imposable was Rs. 12,096, which was less than Rs. 25,600, the order of the IAC was without jurisdiction. It was contended before the Tribunal on behalf of the assessee that even otherwise the order of penalty was made beyond the period of limitation prescribed in S. 275 and the Tribunal took the view that the amendment of s. 275 was brought into force from April 1, 1971, and "at that stage the period of limitation of two years which was prescribed under that section as it then existed had not expired". Arising out of this order of the Tribunal, the following three questions were referred under S. 256(1) at the instance of the Revenue :

(3.) ASSUMING for a moment that the said question No. 1 was a question of law, in view of the finding recorded by the Tribunal, the answer to that question has to be in the affirmative.