COMMISSIONER OF INCOME TAX Vs. CHITRA MUKHERJEE

JUDGEMENT

(1.) THE assessment year involved is 1962-63. The assessee failed to submit its return under S. 139(1) of the IT Act, 1961, within time. Sri Ramanathan, the ITO, started penalty proceedings under s. 271(1)(a) against the assessee for late filing of the return and issued a notice dated February 23, 1967, to the assessee to show cause why penalty should not be imposed. The said notice was served on the assessee on March 17, 1967. The assessee did not offer any explanation in response to that notice. Thereafter, Sri Ramanathan was transferred and he was succeeded by Sri N. K. Roy. The assessee states that he had no knowledge of succession and there is nothing on record to show that the assessee had knowledge. The successor-ITO proceeded with the matter from the stage at which his predecessor had left it without issuing any fresh notice either under S. 129 or under S. 274 of the IT Act, 1961, and imposed a penalty of Rs. 11,051.

(2.) THE assessee, being aggrieved by the said order, appealed to the AAC. The assessee raised three contentions : (i) that notice under S. 274 was never served on the assessee ; (ii) that she was not informed of the change of the incumbent in office and that deprived her of the right to claim the reopening of the penalty proceedings ; and (iii) that the successor-ITO had no authority to pass the penalty order as the assessee had not been heard as required under S. 274 of the Act. The AAC rejected the first two contentions of the assessee on the ground that the assessee had been served with a notice under S. 274 and that as she did not claim the reopening of the penalty proceedings according to the proviso to S. 129 she lost her right to claim the reopening of the penalty proceedings. With respect to the third contention, the AAC held that the successor ITO acted without authority in imposing the penalty as the assessee had not been heard as required by s. 274 of the IT Act, 1961.

(3.) ON behalf of the Revenue, reliance was placed on a decision of this Court in the case of Sadhan Kumar Roy vs. CIT (1977) 107 ITR 954 (Cal). There, this Court was dealing with a notice under s. 33B of the Indian IT Act, 1922, and such a notice had been issued by the CIT in respect of an assessment order dated September 4, 1961. In his reply dated August 29, 1963, the assessee had raised various contentions and asked for an adjournment for three days for furnishing evidence. A different CIT, who had assumed charge in the meantime, had passed an order on September 2, 1963, after refusing time. The assessee's appeal to the Tribunal was dismissed. On a reference to this Court, it was noted that it was contended on behalf of the assessee that there was non- compliance with S. 5(7C) of the Act of 1922 inasmuch as the assessee was not given a fresh hearing. Under S. 33B, it was necessary to pass the impugned order within two years from the date of assessment. It was emphasised that under S. 5(7C) the assessee had a right to ask for a re- hearing by the changed CIT. But the assessee did not ask for a hearing personally, but wanted time to adduce evidence. It was not the assessee's case in the High Court that he had additional evidence on September 4, 1963. As was pointed out by the Tribunal, the assessee wanted to delay the passing of the order so that it could be barred by limitation. In the circumstances, there was no non-compliance with the provisions of S. 5(7C) as was rightly held by the Tribunal. This Court observed at p. 957 of the report as follows :