TMI Blog1978 (10) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as " the Act "), determining the assessable income at Rs. 59,118 and 1,08,044. The Additional Commissioner set aside both these orders exercising jurisdiction under s. 263 of the Act on the ground that the assessee had not paid any tax on self-assessment basis nor had it filed any estimate or paid any advance tax in terms of s. 212(3). The ITO completed the assessments without issuing any penalty notice under s. 273(b). No notices were also issued even for delay in submitting these returns nor any penalty was levied in terms of s. 271(1)(a) of the Act. The Commissioner, therefore, felt that prima facie the orders passed by the ITO were erroneous and prejudicial to the interests of the revenue. Against this order of the Additional Commissioner the assessee preferred an appeal before the Tribunal in respect of both the assessment orders. The Tribunal, after hearing the appeals, came to the conclusion that the assessment orders passed by the ITO for the years 1967-68 and 1968-69 won not erroneous and the Additional Commissioner had no jurisdiction to revise them under s. 263. It was hold that the exercise of jurisdiction by the Additional Commissioner under s. 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der s. 143 of the Act. He contended that what their Lordships of the Supreme Court in the two cases cited by learned counsel for the revenue held was that it is in the proceedings for assessment that jurisdiction could be exercised for imposition of penalty as, according to their Lordships, the term " assessment " is used in a wider sense. But learned counsel contended that it could not be said that if the ITO has failed to notice certain facts which could attract the provisions contained in s. 271(1)(c), the order of assessment is erroneous, He. therefore, contended that the case relied upon by the Tribunal is the case which applies with full force and the Tribunal was right in following that case. Section 271(1)(a) of the Act provides : " 271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person-- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. Nor has the expression, ' all the provisions of Chapter IV shall so far as may be apply to such assessment ' a restricted content; in terms it says that all the provisions of Chapter IV shall apply so far as may be to assessment of firms which have discontinued their business. By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee. It is true that this liability arises only if the Income-tax Officer is satisfied about the existence of the conditions which give him jurisdiction and the quantum thereof depends, upon the circumstances of the case." These observations of their Lordships, therefore, clearly indicate that the assessment does not mean only computation of income but con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quoted with approval : " The expression ' assessment ' used in these sections (provisions of Chapter IV of the Indian Income-tax Act) is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof ... By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee. and on this basis allowed the appeal. It is, therefore, clear that according to the view of their Lordships of the Supreme Court the word " assessment " is not used in the Indian I.T. Act in the narrow sense of computing income only but is used in a wider perspective and, therefore, when proceedings for assessment are pending before the ITO, if facts attracting the provisions of s. 271(1)(a) come to his notice while proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings of assessment it may be that some error in the proceedings has been committed. But so far as the order of assessment is concerned according to learned counsel, failure to take action under s. 271(1)(a) could not be said to be an error if the order of assessment otherwise is found to be in order. This contention of learned counsel for the assessee cannot be accepted in view of the wide meaning given to the term " assessment " as laid down by their Lordships of the Supreme Court in the cases referred to above. It is also not disputed before us that the proceedings of assessment are not only computation of income and tax but various other things which fall within the scheme of Chap. XIV which talks of procedure for assessment. And it also could not be disputed that when s. 271(1) talks of" proceedings pending " it will include the proceedings for assessment within the scheme of Chap. XIV of the Act, and the proceedings of assessment under the scheme of this law ultimately culminating in an order of assessment. Section 263 (1) of the Act reads : " 263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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