COMMISSIONER OF INCOME TAX Vs. SARDARILAL BHASIN

JUDGEMENT

(1.) BY this reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Jabalpur Bench, Jabalpur, has referred the following question of law to this court for its opinion :

(2.) THE material facts giving rise to this reference, briefly, are as follows : THE assessee derives income from forest contracts. For the assessment year 1964-65, the assessee filed his return of income showing total income of Rs. 4,085. THE Income-tax Officer, however, determined the total income of the assessee at Rs. 19,000. THE Income-tax Officer also initiated penalty proceedings under Section 271(l)(c) of the Act and as the minimum penalty imposable exceeded Rs. 1,000, the Income-tax Officer referred the case to the Inspecting Assistant Commissioner under Section 274(2) of the Act. On March 2, 1971, the Inspecting Assistant Commissioner passed an order imposing penalty of Rs. 15,000 on the assessee under Section 271(l)(c) of the Act. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. THE Tribunal held that the assessee was not given proper opportunity of hearing. In this view of the matter, the Tribunal set aside the order passed by the Inspecting Assistant Commissioner and remanded the case to the Inspecting Assistant Commissioner for deciding the question of levy of penalty afresh on merits, in the light of the order passed by the Tribunal. In pursuance of that order, the Inspecting Assistant Commissioner passed a fresh order on September 22, 1979, imposing penalty on the assessee. Aggrieved by that order, the assessee preferred an appeal before the Tribunal. THE Tribunal held that the order imposing penalty should have been passed within two years of March 7, 1969, the date of the assessment order, and that after the period of limitation, the Inspecting Assistant Commissioner was not justified in levying penalty under Section 271(l)(c) of the Act. THE Tribunal, therefore, set aside the order imposing penalty and allowed the appeal filed by the assessee. Aggrieved by the order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.

(3.) ON behalf of the assessee, it was contended that in the instant case, Clause (a) of Section 275 of the Act would be attracted. The contention cannot be upheld. Clause (a) is attracted in cases where the relevant assessment or other order which has given rise to imposition of a penalty, is the subject-matter of an appeal. In the instant case, it is not disputed that no appeal had been preferred by the assessee from the order of assessment passed by the Income-tax Officer. Therefore, as held by this court in CIT v. Dr. Manoranjan Mohanty [1988] 171 ITR 95, Clause (b) of Section 275 would be applicable in such a case. The initial order levying penalty was passed by the Inspecting Assistant Commissioner within the time prescribed therefor by Clause (b) of Section 275. It is, however, contended on behalf of the assessee that Clause (b) of Section 275 is attracted when an order imposing penalty, subsequent to remand, is passed.