PRABHUDAYAL AMICHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this reference under S. 256 (1) of the IT Act, 1961 (hereinafter referred to as "the Act"), the Tribunal, Indore Bench, has referred the following question of law to this Court for its opinion "Whether, on the facts and in the circumstances of the case, the Tribunal was right in setting aside the order dated March 31, 1980, passed by the ITO under S. 271(1)(c) of the IT Act, 1961, and directing him to pass a fresh order in accordance with law instead of upholding its cancellation ?" The material facts giving rise to this reference, briefly, are as follows

(2.) DURING the course of the assessment proceedings for the asst. year 1973 74, the ITO noticed that the assessee had furnished inadequate particulars of its income. The ITO, therefore, initiated proceedings against the assessee under S. 271 (1 ) (c) of the Act and a notice under S. 274 of the Act was served on the assessee. The ITO, after recording his satisfaction that the assessee had concealed income to the extent of Rs. 45,245, levied penalty under S. 271(1)(c) of the Act. Aggrieved by the order passed by the ITO, the assessee preferred an appeal before the CIT (A). It was contended on behalf of the assessee that the order passed by the ITO deserved to be quashed as no approval of the IAC, as required by the proviso to cl. (iii) of S. 271(1) of the Act, was obtained by the ITO and no opportunity of hearing was given to the assessee. The CIT (A) upheld these contentions and quashed the order passed by the ITO. Aggrieved by the order passed by the CIT (A), the Revenue preferred an appeal before the Tribunal. The Tribunal held that the CIT (A), instead of quashing the order passed by the ITO imposing penalty, should have remitted the matter to the ITO for passing a fresh order in accordance with law. In this view of the matter, the Tribunal allowed the appeal and directed the ITO to pass an order afresh in accordance with law. Aggrieved by the order of the Tribunal, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

(3.) OUR answer to the question referred to this Court is, therefore, in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.