1988 (11) TMI 51 - HC - Income Tax

Summary

Issues:
1. Jurisdiction of Income-tax Officer to levy penalty exceeding Rs. 1,000.
2. Applicability of section 274(2) of the Income-tax Act based on the date of filing the return.

Analysis:
The judgment pertains to a case where the Income-tax Officer added the cost of toria pledged by the assessee with a bank as income from undisclosed sources during assessment for the year 1970-71. Subsequently, penalty proceedings were initiated under section 271(1)(e) of the Income-tax Act, 1961. The Income-tax Officer levied a penalty exceeding Rs. 1,000, which was later canceled by the Income-tax Appellate Tribunal in Amritsar. The Tribunal based its decision on the law prevailing at the time of the return filing date, where the jurisdiction of the Income-tax Officer to levy penalty was limited to Rs. 1,000. The Tribunal referred two questions to the High Court for opinion: 1. Whether the law applicable for penalty proceedings should be based on the date of filing the return, and 2. Whether the Income-tax Officer had jurisdiction to levy the penalty exceeding Rs. 1,000.

The High Court, in its analysis, referred to previous decisions and held that the crucial date to determine jurisdiction is when the Income-tax Officer initiates penalty proceedings, not the date of filing the return. Citing earlier cases such as CIT v. Raman Industries and CIT v. Mela Ram Jagdish Raj and Co., the High Court emphasized that the date of initiation of penalty proceedings governs jurisdiction. Therefore, the High Court answered the first question in the negative, favoring the Revenue and against the assessee. However, due to the absence of crucial facts regarding the initiation of proceedings in the case documents, the High Court could not answer the second question. Consequently, the High Court directed the Tribunal to reconsider the matter in light of the clarified interpretation of the law regarding jurisdiction in penalty proceedings.