COMMISSIONER OF INCOME TAX Vs. GANGADAS TOPANDAS

JUDGEMENT

(1.) THIS is a reference on a case stated by the Tribunal under S. 256(1) of the I. T. Act, 1961. The facts giving rise to this reference are as follows :

(2.) WE propose to deal with question No. 1 first. Before going into the submissions made by the learned counsel on behalf of the respective parties, it would be necessary to take a brief look at the relevant provisions of the IT Act. Chapter XXI of the IT Act deals with penalties imposable. Sec. 271 in that Chapter deals with the power of the ITO or the AAC to impose a penalty for failure to comply with a notice, concealment of income and so on. It is not necessary to set out the provisions of S. 271. Suffice it to say that S. 271(1)(c) r/w S. 274 provides that if the ITO or the AAC in the course of any proceedings under that Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay an amount by way of penalty. Sub s. (1) of S. 274 provides that no order imposing a penalty under Chapter XXI shall be made, unless the assessee has been heard or has been given a reasonable opportunity of being heard. Before its amendment, which came into effect on April 1, 1971, Sub S. (2) of S. 274 read as follows:

(3.) IF the provisions of the aforesaid sub section are analysed, the result is that prior to April 1, 1971, in case the minimum penalty imposable was more than Rs. 1,000, the ITO could not impose such penalty but had to refer the matter to the IAC, who, on such reference, got the jurisdiction to impose such penalty. By the amendment it was provided that only in a case where the income, in respect of which the particulars had been concealed or inaccurate particulars had been furnished, exceeded a sum of Rs. 25,000, the ITO had no jurisdiction to impose the penalty but had to refer the matter to the IAC for the imposition of penalty. Prior to the amendment, the jurisdiction of the ITO was limited to cases where the minimum penalty imposable was Rs. 1,000 or less, whereas after the amendment it was limited to cases where the concealed income or income in respect of which inaccurate particulars had been furnished did not exceed a sum of Rs. 25,000. One thing is clear that in certain cases it was the ITO who had the jurisdiction to impose penalty, and it was only in other cases where he had no jurisdiction to impose penalty that he was required to refer the matter to the IAC, who on such reference got the jurisdiction to deal with the case and impose penalty.