TMI Blog1971 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for the assessment year 1956-57 on September 19, 1956. The assessment was completed on November 21, 1956. Thereafter, the Income-tax officer discovered that the assessee did not include in the return the value of perquisites received by him from the Raymond Woollen Mills, Bombay, of which he was a director. In his opinion the case fell under section 147(1)(a) of the Act and he, accordingly, reopened the assessment and issued a notice under section 148 calling for a fresh return. The assessee complied with the notice and filed a fresh return and included therein a sum of Rs. 7,472 being the value of the perquisites. The Income-tax Officer, however, assessed the value of the perquisites at Rs. 16,067 and completed a supplementary assessment. The Inspecting Assistant Commissioner of Income-tax being of the opinion that the assessee had concealed his income or had furnished inadequate particulars thereof, initiated proceedings for imposition of penalty under section 271(1)(c) of the Act. The assessee filed a written explanation and raised two contentions. His first contention was that as the original assessment proceedings had been completed under the Indian Income-tax Act of 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961, a penalty may still be imposed in such proceedings in respect of the original default which resulted in the escape of income from tax in the relevant assessment year. The Allahabad High Court in Mayaram Durga Prasad v. Commissioner of Income-tax has taken a view that in the course of proceedings under section 34 which is equivalent to sections 147 and 148 of the new Act in respect of the escaped income of past year, no penalty can be imposed for the default of concealing income in the original assessment proceedings and in this connection the Allahabad High Court has also referred to its earlier judgment in Seth Kashinath Bagla v. Commissioner of Income-tax. In our opinion so long as the Allahabad decision stands we are bound by it and though the Allahabad High Court's judgment was given while interpreting the sections of the old Act of 1922, the relevant sections of the new Act being in pari materia with the corresponding sections of the new Act, the Allahabad decision in Mayaram Durga Prasad v. Commissioner of Income-tax will still apply. " The Income-tax Appellate Tribunal, therefore, cancelled the penalty and observed : " In view of the view taken by us above, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmit the learned counsel to canvass these questions before us. The Tribunal, as we have already shown, decided the case on only one ground leaving all other questions raised by the assessee open. In our opinion, it is the jurisdiction of the Tribunal in the first instance to give its decision on all the questions raised before it and it is, thereafter, that we can tender opinion on any question of law referred to us. We cannot bypass the jurisdiction of the Income-tax Appellate Tribunal by pronouncing upon those questions upon which the Tribunal had specifically reserved its opinion. The question of law which the learned counsel for the assessee is seeking to raise may be questions arising out of the order of the Tribunal but those questions have not been referred to us. The only question which the Tribunal intended to refer was as to whether penalty could be imposed in the instant case in view of the decision of this court in Mayaram Durga Prasad. We would, therefore, answer that question alone. However, the question as framed by the Tribunal is very wide and may include the points which the learned counsel for the assessee is seeking to raise before us. That clearly was not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. " There are two requirements of this provision which must be satisfied before a penalty can be imposed. Firstly, the Income-tax Officer must be satisfied that the assessee has concealed his income or has deliberately furnished inaccurate particulars thereof. Secondly, the satisfaction of the Income-tax Officer must be arrived at " in the course of any proceedings under the Act." The first requirement presents no difficulty. The Income-tax Officer has to record a finding that the assessee has concealed his income or has deliberately furnished inaccurate particulars thereof. That would essentially be a finding of fact and in the absence of such a finding no penalty is leviable even if the return is incorrect. The second requirement, however, presents some difficulty. What is the meaning of the expression " during the course of any proceedings ". The expression is very widely worded but it has its obvio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default committed during the original proceedings which had come to in end. It is true that proceedings under section 34 are in some way proceedings distinct from the original proceedings. Where reassessment is made under section 34, the Income-tax Officer's jurisdiction is confined to the income which has escaped and does not extend to revision, reopening or re-considering the whole assessment : See Kashinath Bagla v. Commissioner of Income-tax and Kevaldas Ranchhoddas v. Commissioner of Income-tax Likewise, in proceedings under section 34, the assesseee cannot reagitate questions which have been decided in the original assessment. The original assessment cannot be challenged in appeal againstan assessment order under section 34 : See Commissioner of Income-tax v. A. D. Shroff. But, the proceeding under section 34 even though not idendtical with the original assessment proceedings are nevertheless proceedings relating to the same assessment year. The purpose of the proceedings under section 34 is to bring to tax the income which should have been assessed during the original assessment proceedings. A notice under section 34 requires an assessee, to file a fresh return but that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cannot be given where the concealment is not detected during the course of the original assessment proceedings. If that view is accepted it will not be possible to levy penalty in cases where concealment leads to escapement of income. That would amount to a premium in favour of an assessee who succeeds in concealment of his income as against an assessee who merely makes an attempt at concealment but is detected before the assessment is finalised. That could not have been the intention of the legislature. It must be remembered that a finding with regard to the correctness or otherwise of a return arrived at during the assessment proceedings is not final but is always open to review under section 35 or section 34. When an assessment is reopened under section 34, the finding with regard to the original return stands reopened and the ultimate finding as to whether a return is correct or not is to be found in the order passed under section 34. The ultimate finding recorded by the Income-tax Officer in the case of Mayaram Durga Prasad was that the original return was incorrect even though it was believed to be correct when the original assessment was made. We are, therefore, of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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