SHAKTI OFFSET WORKS Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THIS order deciding common question will dispose of both these petitions. In order to understand the nature of contest between the parties, a few facts giving rise to those petitions may be noticed.

(2.) THE petitioner in Special Civil Application No. 1065 of 1965 is a partnership firm called 'Shakti Offset Works'. It carries on business of lithography and art - printing. The petitioners years of account is ending Diwali. For the account year ending Diwali of 1958, the assessment year is 1959 -60. The petitioner filed a return in 1960, in respect of that income for the account year ending Diwali 1958. The petitioner has shown a sum of Rs. 25,000 as loan incurred from some money -lenders at Bombay. The assessment was completed by the income -tax Officer on or about 13th September, 1963. In this order the Income -tax Officer recorded a finding that the item of Rs. 25,000 could not be allowed as admissible expenditure and he added it as concealed income. An appeal was preferred against this order by the petitioner which was decided by the Appellate Assistant Commissioner has upheld the finding regarding this item of concealed income. The Income -tax Officer issued a notice purporting to act under section 274 read with section 271 of the Income -tax Act, 1961. This notice was issued on September 13, 1963, calling upon the petitioner to show cause why they should not be penalised for having concealed their income. It appears that when this notice was pending, the Inspecting Assistant Commissioner also issued a notice under section 274 (1), read with section 271 of the Income -tax Act, 1961, on 30th April, 1965. The Inspecting Assistant Commissioner passed an order on l7th September, 1965, imposing a penalty or Rs. 30,000 on the petitioner under section 271 (1) (c) of the Income -tax Act, 1961. The petitioner challenges the power of the Inspecting Assistant Commissioner or, for the matter of that, of the Income -tax Officer, to issue notice against the petitioner under the provisions of the Income -tax Act of 1961.

(3.) IN both these petitioners the petitioners contention is that they have been proceeded against in exercise of power under section 271 and section 274 of the Income -tax Act of 1961, read with the provisions of section 297(2)(g) thereof. Their case is that the provisions of section 297 (2) (g) of the Income -tax Act, 1961, are ultra vires of the powers of the Central Legislature because they offend the protection and guarantee to which the petitioners are entitled under article 14 of these Constitution. Their further contention is that the petitioners on the terms of section 271 itself could not be proceeded against because they did not commit any breach a of any of the trims of section 271.