COMMISSIONER OF INCOME TAX Vs. DAJIBHAI KANJIBHAI

JUDGEMENT

(1.) IN this Departmental reference relating to the assessee's assessment for the asst. year 1969 70, the Tribunal has referred to this Court the following six questions of law under S. 256(1) of the IT Act, 1961. The questions read thus :

(2.) THOUGH S. 271(1)(c) was not mentioned as one of the sections which the ITO was satisfied was attracted, the IAC to whom the reference was made imposed penalty of Rs. 3 lakhs under S. 271 (1)(c) of the IT Act, 1961, by his order dt. 30th March, 1974. The Inspecting Assistant Commissioner had, it may be stated, allowed the assessee an opportunity of hearing before passing his order. In the appeal filed by the assessee before the Tribunal, a number of grounds were taken. One of the grounds was that the ITO was riot satisfied during the course of the assessment proceedings that the penal provisions of S. 271(1)(c) were attracted and as such imposition of penalty under S. 271(1)(c) was not justified. The Tribunal accepted this contention and allowed the appeal on this ground amongst many other grounds.

(3.) IN our judgment, the legal position in this regard is now well settled. In view of the Supreme Court's decision in CIT vs. S. V. Angidi Chettiar (1962) 44 ITR 739, power to impose penalty under s. 28 of the old Act corresponding to S. 271 of the new Act depends upon the satisfaction of the ITO in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in cls. (a), (b) and (c) before the proceedings are concluded. There is no evidence on record to show that the ITO, in this case, was satisfied in the course of the assessment proceedings. Therefore, we must hold that the penal provisions of S. 271(1)(c) were not attracted in this case. The question is, therefore, answered accordingly in the affirmative and in favour of the assessee. In view of our answer to question No. 3, no other questions survive and are, accordingly, not answered. It is made clear that the penalty imposed by the IAC stands hereby quashed. No order as to costs.