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2013 (11) TMI 662 - HC - Income TaxPenalty u/s 271(1)(c) of the Income tax Act – Jurisdiction of AO to initiate penalty proceeding under section 271(1)(c) of the Income tax act, when the prior approval of Deputy Commissioner is not obtained – Application of proviso of section 271(1)(iii) of the Income tax Act - Investment shown by the assessee and his brothers in the renovation of the said property on the basis of the report of the valuation officer, was found to be understated by the I.T.O. Therefore, unexplained investment was added to the assessee's total income in respect of the assessment years in question - Assessing Officer had initiated proceedings for levying penalty u/s 271(1)(c) of the Income Tax Act. Held that:- ITO has initiated penalty proceedings. The quantum of concealed income was assessed at Rs.36,000/- for the year 1975-76, and Rs.37,000/- for the assessment year 1976-77. During the pendency of penalty proceedings, the assessee filed appeals against the assessment orders, which were allowed, and that the unexplained income was reduced to Rs.18,373/- for the assessment year 1975-76 and Rs.6,140/- for the assessment year 1976-77. When the order under Section 271 (1) (c) of the Income Tax Act, imposing penalty came to be passed, the quantum of income was reduced to below 25,000/-. The AO, therefore did have jurisdiction, to give directions for payment by way of penalty, without the previous approval of the Deputy Commissioner in view of proviso to clause (iii) of sub section (1) of Section 271. The restrictions placed by proviso to clause (iii) of sub-section (1) of Section 271 of the Act cannot be interpreted in a manner to curtail the jurisdiction on the ITO, not to initiate proceedings. Under the facts and circumstances of the case, imposition of penalty by the AO is not in contravention of the proviso of sub section (1) of Section 271 of the Act – Decided in favor of Revenue.
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