9911796707
TMI Blog1970 (2) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... rm dealing in gunnies, twines, etc. For the assessment year 1961-62, the firm returned a total income of Rs. 99,672. The Income-tax Officer, however, held that the total income of the assessee was Rs. 1,57.434. He found that the firm had camouflaged certain of its transactions as those of a different firm and another individual. The assessment was completed on June 5, 1962, and in the order of assessment the Income-tax Officer observed : " " Since the firm has deliberately diverted its profits by creating a bogus firm and carried on business in the name of another person, viz., T. Narasimhamurthy, action under section 28(1)(c) has been taken separately." On June 5, 1962, itself the Income-tax Officer passed the following order in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed a penalty of Rs. 60,000. The Income-tax Appellate Tribunal confirmed the order of the Inspecting Assistant Commissioner imposing the penalty. Thereafter, at the instance of the assessee, the Income-tax Appellate Tribunal stated a case and referred the question mentioned above for our decision. The first submission of the learned counsel for the assessee was that the notice dated June 5, 1962, was issued under section 28(3) of the Income-tax Act of 1922, and not under the provisions of the Act of 1961 and was, therefore, invalid. It is not disputed by the learned counsel for the department that the notice should have been properly issued under the provisions of the 1961 Act in view of section 297(2)(g) of the Act of 1961. He, however, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it could be justified under some other power under which the Government could lawfully do that act. In the light of the pronouncements of the Supreme Court we agree with the learned counsel for the department that the notice dated June 5, 1962, is not invalid merely because it refers to the provisions of the Income-tax Act of 1922 instead of to the provisions of the Act of 1961. The next submission of the learned counsel for the assessee was that section 275 of the Income-tax Act, 1961, required that penalty proceedings should be commenced before the completion of the assessment proceedings and that in the present case the penalty proceedings were not so commenced and, therefore, they could not be validly continued, not having been vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round throughout the proceedings that there was an order dated June 5, 1962, in the order sheet directing the issue of a penalty notice. We, therefore, did not allow the learned counsel to raise the question whether there was such an order in existence as that would have necessitated our going behind the statement of the case into a question of fact which was undisputed before the Tribunal. The first question for our consideration is whether section 275 of the Income-tax Act of 1961 requires that penalty proceedings should commence before the completion of the assessment proceedings. Section 271(1)(c), section 274(1) and section 275 are relevant and they may be usefully extracted here. They are, in so far as they are relevant, as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the Bombay High Court in Shakti Offset Works v. Inspecting Assistant Commissioner of Income-tax. At page 646, the learned judge observed : " Under the 1922 Act there was no limit of time for commencement of penalty proceedings, but tinder the new Act the penal proceedings are required to be commenced before the completion of the proceedings in which the Income-tax Officer or the Appellate Assistant Commissioner are satisfied that the default attractions the penalty has been committed." Again at page 655, they observed : "A perusal of the opening words of section 271 (1) and section 275 of the Income-tax Act of 1961 would show that the proceedings for imposition of penalty have to be commenced before the completion of assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an insuperable difficulty in the way of accepting the contention of the assessee. If the contention of the assessee is accepted, section 275 would mean that in the case of proceedings in the course of which proceedings for imposition of penalty have commenced, no order imposing a penalty shall be passed after the expiration of two years from the date of completion of such proceedings. Does it mean that section 275 is attracted only to cases where penalty proceedings are commenced in the course of assessment proceedings ? Does it then mean that in cases, where penalty proceedings are not commenced in the course of the assessment proceedings but are started after completion of assessment there is no time limit for completing the penalty proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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