COMMISSIONER OF INCOME TAX Vs. SADHU RAM

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh Bench, vide order dated June 23, 1975, has referred the following two questions (question No. 1 at the instance of the revenue and question No. 2 at the instance of the assessee) to this court under Section 256(1) of the I.T, Act, 1961 (hereinafter called " the Act "):

(2.) IN response to a notice under Section 148 of the Act, the assessee filed the return on June 17, 1968, showing an income of Rs. 7,094. The ITO, however, after necessary proceedings, assessed the income at Rs. 22,140 on February 9, 1970, and issued notice to show cause as to why penalty may not be imposed for concealment of income. He referred the matter to the IAC on February 20, 1970, for the imposition of the penalty because at that time, the ITO was competent only to impose a penalty of Rs. 1,000. The assessment order was later on rectified by the ITO on April 27, 1970, so as to reduce the total income to Rs. 10,738. The IAC, after hearing the assessee, imposed a penalty of Rs. 16,000 under Section 271(1)(iii) of the Act, vide order dated March 4, 1972. This order was challenged by the assessee by way of appeal before the Appellate Tribunal on two grounds, namely, that the penalty order having been passed more than two years after the assessment order was without jurisdiction and that the penalty levied being less than Rs. 25,000 it could be imposed by the ITO and not by the IAC. The Tribunal rejected the first contention but allowed the appeal on the second and set aside the order imposing penalty.