TMI Blog1976 (8) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee's income from undisclosed sources and issued a notice under s. 274 read with s. 271(1)(c) of the Act to the assessee for concealment of Rs. 10,263 as its income. As the minimum penalty imposable on Rs. 10,263 exceeded Rs. 1,000, the ITO referred the penalty proceeding to the IAC before whom it was admitted by the assessee's representative that this amount was wrongly shown by the assessee's accountant in the balance-sheet without verifying the correct facts. The assessee's explanation was that this amount was shown by mistake in the balance-sheet as a partner of the assessee-firm who was looking after the accounts died suddenly and the clerk who was entrusted with the maintenance of account books was not conversant with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee had concealed its income. He urged that the basis of charge of concealment was not altered by the IAC who, on the evidence adduced by the assessee, had altered the amount of concealment of its income and, therefore, the IAC had jurisdiction to impose the penalty. It was finally contended by him that at least to the extent of Rs. 10,263 the IAC had jurisdiction to impose the penalty. On the other hand, Dr. Pal submitted that the revenue not having questioned the findings of the Tribunal, namely, that the charge of concealment of Rs. 10,263 made against the assessee by the ITO was washed away by the findings of the IAC and that the IAC had imposed penalty on a new case of concealment of Rs. 19,647 on the ground of pervers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealment of Rs. 8,000 and referred it to the IAC who levied penalty on Rs. 8,000 and also on Rs. 19,228 with a finding that this amount had also escaped assessment. On appeal, the Tribunal found that no penalty was leviable in respect of Rs. 8,000 and, after recomputing the income, added certain sums and directed the recomputation of penalty on the basis of those additions. It was held by the High Court that since no penalty was leviable on Rs. 8,000, the Tribunal was wrong in directing the recomputation of penalty on the basis of those additions. Now, the relevant portion of s. 271(1)(c) read with s. 274(2) of the I.T. Act, 1961, shows that there are three preconditions which must be satisfied before the IAC can be vested with jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and if by the findings of the IAC the assessee is exonerated from that charge no penalty can be imposed by the IAC who must also drop the penalty proceedings against the assessee. It is not the finding of the ITO that the assessee has concealed Rs. 19,647 as its income and no such case was referred by him to the IAC. The fact found and stated by the Tribunal is that the assessee was charged with concealment of Rs. 10,263 as its income by the ITO who referred this particular charge against the assessee to the IAC. It has also been found and stated by the Tribunal that in view of the findings of the IAC the very basis of that charge was washed away. It has further been found and stated by the Tribunal that the IAC has imposed penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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