TMI Blog1971 (9) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... irm for the accounting year. Under these circumstances, he added a sum of Rs. 58,000 as income which had been concealed by the assessee. He assessed the assessee-firm accordingly and he also issued a notice under section 274 for concealment of income. Against this assessment order the assessee appealed to the Appellate Assistant Commissioner. That officer came to the conclusion that there was no sale out and out of 1,383 bags as had been held by the Income-tax Officer but he came to the conclusion that those 1383 bags were included in the stock, but the assessee had under-valued its stock. The Appellate Assistant Commissioner came to the conclusion that on the footing of under-valuation of the stock held by the assessee at the end of the accounting year, a sum of Rs. 34.000 should be added and not the sum of Rs. 58,000 as had been done by the Income-tax Officer. Against the decision of the Appellate Assistant Commissioner there was a further appeal to the Tribunal and the Tribunal by its order, dated February 20, 1967, held that there was under-valuation of the stock but on this footing, according to the Tribunal, an amount of. Rs. 20,213 should be added to the income as shown in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner. The Tribunal upheld this contention and held that the jurisdiction of the Inspecting Assistant Commissioner in regard to the imposition of penalty was restricted to those items of concealment of income in regard to which the Income-tax Officer was satisfied that there was concealment of income. The Tribunal, therefore, held that the order of the Inspecting Assistant Commissioner imposing penalty for concealment was without jurisdiction and it, therefore, allowed the appeal and set aside the order levying the penalty. Thereafter, at the instance of the revenue, the following question has been referred to this High Court : " Whether, on the facts and in the circumstances of the case, it was competent in law for the Inspecting Assistant Commissioner of Income-tax to impose penalty under section 271(1)(c) for concealment of income ?" In order to appreciate the contentions urged in this connection, it is important to note some of the provisions of the Income-tax Act, 1961 (hereinafter referred to as " the Act"). Under section 271(1), if the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty can only be passed after the assessee has been given a reasonable opportunity of being heard. As a part of that reasonable opportunity of being heard, the assessee must be told as to what is the particular satisfaction the Income-tax Officer or the Appellate Assistant Commissioner, as the case may be, has arrived at, viz., whether the satisfaction is that the assessee has concealed the particulars of his income or whether the satisfaction is that he has furnished inaccurate particulars of such income. It is possible that the notice under section 271(1)(b) merely may set out the two grounds but such notice will have to be read with reference to the assessment order and by reading the notice for the commencement of penalty proceedings and the assessment order together, it will be possible for the assessee concerned to ascertain as to whether the charge against him is of concealment of the particulars of his income or whether the charge is of furnishing inaccurate particulars of his income. In the instant case, the notice for penalty proceedings was directed to be issued by the Income-tax Officer by including the following sentence in the assessment order: " Issue notice under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by suppression of sales of 1,383 bags of garlic out and out. The conclusion of the Inspecting Assistant Commissioner was that there was furnishing of inaccurate particulars of his income by the assessee inasmuch as the stock at the closing of the year was under-valued. Thus though the charge was in regard to concealment of particulars of the income, the ultimate conclusion was based on the footing of furnishing inaccurate particulars of his income by the assessee. Thus, it is clear that the penalty proceedings having been commenced against the assessee on a particular footing, viz., of concealment of particulars of income, the final conclusion of levying the penalty was based on a different footing altogether, viz., on the footing of furnishing inaccurate particulars of his income. Under these circumstances, it is clear that it cannot be said that the assessee had been given a reasonable opportunity of being heard before the order imposing the penalty was passed. Moreover, under the scheme of section 271, the penalty proceedings under the Act may be initiated either by the Income-tax Officer or by the Appellate Assistant Commissioner. The Appellate Assistant Commissioner has to m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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