COMMISSIONER OF INCOME TAX Vs. FAKIRCHAND DAYARAM

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961, hereinafter called "the Act", made by the Income-tax Appellate Tribunal, Indore Bench. The following duestion of law has been referred to this court for its opinion :

(2.) THE material facts giving rise to this reference briefly are as follows: For the assessment year 1968-69, the assessee had submitted a return disclosing his income as Rs. 20,981. THE ITO, however, assessed the income at Rs. 26,250. THE ITO, being satisfied that the assessee was liable to an imposition of penalty under Section 271(1)(c) of the Act, directed by the assessment order dated 22nd February, 1971, initiation of penalty proceedings against the assessee. THE ITO referred the penalty proceedings to the IAC on 9th March, 1971, as, in the opinion of the ITO, the minimum penalty imposable exceeded Rs. 1,000. THE IAC was satisfied that the assessee had furnished inaccurate particulars of his income and the IAC accordingly imposed a penalty of Rs. 7,524 by his order dated 15th March, 1973. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. It was contended on behalf of the assessee before the Tribunal that under Section 275 of the Act an order imposing a penalty could be passed by the IAC after the expiry of a period of two years from 22nd February, 1971, the date on which the assessment proceedings were completed. It was, therefore, contended that as the order of penalty was passed by the IAC after the expiry of the period of two years, the order imposing penalty was illegal. This contention was upheld by the Tribunal. THE Tribunal, therefore, set aside the order of imposition of penalty and allowed the appeal. Aggrieved by that order, the Department submitted an application under Section 256(1) of the Act, and it is at the instance of the Department that the aforesaid question of law has been referred to this court for its opinion.