9911796707
TMI Blog1970 (1) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment was completed on February 19, 1959. Two days prior to the completion of the assessment, i.e., on February 17, 1959, the Income-tax Officer issued a notice under section 28 of the Act, calling upon the assessee to show cause as to why penalty should not be imposed upon it, for concealment of income and deliberate furnishing of inaccurate particulars of income. The assessee filed an appeal to the Appellate Assistant Commissioner against the assessment challenging the quantum of addition made by the Income-tax Officer. After due consideration of the appeal the Appellate Assistant Commissioner passed an order dated February 3,1960, reducing the addition by rupees one lakh. On further appeal, by its order dated November 22, 1960, the Appellate Tribunal sustained an addition of rupees one lakh. On September 11, 1961, the Income-tax Officer pursued the penalty proceedings initiated by him on February 17, 1959, and levied a penalty of Rs. 25,000 on the assessee. On first appeal the Appellate Assistant Commissioner and, on second appeal, the Appellate Tribunal upheld the penalty. In this reference, we are neither concerned with the question as to whether penalty is at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above construction, contended that, under the scheme of the Act as shown above, there can be no room for doubt, that if section 28 is so construed, the assessee would escape penalty, because the Income-tax Officer is also a party in the appeals before the Appellate Assistant Commissioner and the Tribunal and it is always open to him to bring to the notice of the appellate authorities in an appropriate case that there exist circumstances in the case which attract the penal provisions of the Act and that they should impose penalty upon the assessee before them. It was further submitted that when these authorities, one above the other in the heirarchy, are empowered to impose penalty upon the assessee for the same offence, nothing, in law, can prevent each one of those authorities from invoking its power and imposing a penalty upon an assessee for the same offence. In order to prevent such an anomalous situation, it would be reasonable to construe section 28 of the Act in a manner which cannot possibly give rise to such an anomalous situation. That purpose could only be achieved if section 28 of the Act is construed in the manner in which he did. It was further submitted that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at under section 28 of the Act liability to pay additional tax, which is designated penalty, is imposed in view of the dishonest and contumacious conduct of the assessee. The observations made by the Supreme Court in the above cases should be considered in the context in which they were made. In C. A. Abraham v. Income-tax Officer the Supreme Court was construing the expression " assessment " occurring in section 44 of the Act, in order to find out whether the word " assessment " included procedure for the imposition of penalty on a dissolved firm. The context in which those observations were made by the Supreme Court is clear from the following passage occurring in that case : " The expression 'assessment', used in the sections of Chapter IV of the Income-tax Act, is not used merely in the sense of computation of income and when section 44 declares that the partners or members of a firm or association shall be jointly and severally liable to assessment, it refers to the liability to computation of income under section 23 as well as the application of the procedure for declaration and imposition of tax liability and the machinery for the enforcement thereof. Nor has the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Assistant Commissioner cannot be withdrawn so as to prejudice the department's right of levying penalty in proper cases, it would follow that the Appellate Assistant Commissioner would be in a better and more advantageous position to impose penalty upon an assessee for concealment of income. In support of the above argument the learned counsel relied upon the observations made by the Supreme Court in Commissioner of Income-tax v. Rai Bahadur Hardutroy Motilal Chamaria which are as follows : " It is impossible to talk of a court of appeal when only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position the statute has conferred very wide powers upon the Appellate Assistant Commissioner once an appeal is preferred to him by the assessee. It is necessary also to emphasize that the statute provides that, once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee ; his competence ranges over the whole assessment and it is open to him to correct the Income-tax Officer, not only with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income. The Appellate Assistant Commissioner, during his enquiry, may come to know additional facts,which are either not disclosed to the Income-tax Officer, or which escape the attention of the Income-tax Officer, and those facts might reasonably lead the Appellate Assistant Commissioner to a finding that the assessee had concealed income. In such a case, if the Appellate Assistant Commissioner has no powers to impose a penalty, the assessee would altogether escape penalty. Therefore, the law has wisely given powers to the Appellate Assistant Commissioner and also the Tribunal to impose penalty on the assessee. When the law empowers more than one authority to impose penalty, it would be unreasonable to expect that each one of them would, in his own turn, invoke and impose penalty. At any rate, the assessee can be punished only once in respect of concealment of income and not by all the three authorities simultaneously or one after the other and for the same offence. It would, therefore, be reasonable to think that when the Income-tax Officer, having original jurisdiction, and the appellate authorities, i.e., Appellate Assistant Commissioner and the Tribunal, are also invested wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that any partner has thereby returned his income below its real amount, he or it may direct that such partner shall, in addition to the income-tax and super-tax, if any, payable by him, pay by way of penalty a sum not exceeding 1 1/2 times the amount of income-tax and super-tax which has been avoided, or would have been avoided if the income returned by such partner had been accepted as his correct income ; and no refund or other adjustment shall be claimable by any other partner by reason of such direction .... (5) An Appellate Assistant Commissioner or the Appellate Tribunal on making an order under sub-section (1) or sub-section (2), shall forthwith send a copy of the same to the Income-tax Officer ...... " On a plain reading of the above section, we find that the language used in section 28 is clear and unambiguous. The section does not under any circumstances oust the jurisdiction of the Income-tax Officer to impose penalty. If the Appellate Assistant Commissioner or the Tribunal imposes penalty on an assessee under section 28(1)(c), he or it is bound under sub-section (5) of section 28, to send a copy thereof to the Income-tax Officer so that he could not once again impo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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