1996 (3) TMI 40 - HC - Income Tax

Summary

Issues: Jurisdiction of Income-tax Officer to levy penalty under section 271(1)(c) for the assessment year 1965-66.

The High Court of Madras was tasked with determining whether the Income-tax Officer had the jurisdiction to levy a penalty under section 271(1)(c) for the assessment year 1965-66. The case involved the assessee filing a return in 1969, with subsequent penalty proceedings initiated due to concealment of income. The original assessment completed in 1970 was set aside and redone in 1972. Penalty proceedings were initiated again, and a penalty was levied. The Appellate Assistant Commissioner canceled the penalty, citing a Supreme Court judgment. The Department appealed to the Appellate Tribunal, which found that the concealment occurred in the original return, and the law at the time of filing the original return should apply. The Tribunal canceled the penalty based on jurisdiction, not on the merits of the case. The Department argued that the penalty was justified under the law applicable after a reassessment in 1974. The High Court noted that the Income-tax Officer was justified in levying the penalty of Rs. 10,000 as per the amended provision of section 274(2) of the Income-tax Act, 1961. The Court referred to previous Supreme Court decisions emphasizing that the penalty must be imposed based on the law in place at the time of the offense. The High Court concluded that the Tribunal was incorrect in its interpretation of the law and ruled in favor of the Department, allowing the penalty to stand. The Court highlighted that the Tribunal did not address the appeal on its merits, leaving room for the assessee to contest the penalty further. The question of jurisdiction was answered in the negative, in favor of the Department, with no costs awarded.