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TMI Blog1971 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1922, penalty could not be levied under section 271(1)(c) of the Act of 1961. His second contention was that he was not aware of the amendment introduced by the Finance Act of 1965, whereby perquisites had become taxable for the first time and, as such, was not guilty of any concealment or deliberately furnishing, inaccurate particulars thereof. The Inspecting Assistant Commissioner of Income-tax held that the penalty under the new Act could be imposed by virtue of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 not necessary to consider the other submissions put forward on behalf of the assessee. " At the instance of the Commissioner of Income-tax the Tribunal has submitted a statement of the case to this court for its opinion on the question of law indicated above. The reference came up for hearing before a Division Bench of this court of which one of us (Hon'ble R. S. Pathak J.) was a member. Before the Bench some decisions were cited in which other High Courts have taken a view contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 intention of the Tribunal. We would, therefore, reframe the question as under : " Whether, on the facts and circumstances of the case, the penalty of Rs. 6,600 levied under section 271(1)(c) of the Income-tax Act, 1961, was rightly cancelled by, the Income-tax Appellate Tribunal on the ground that no such penalty could be imposed during the course of proceedings under section 148 in respect of a concealment committed during the course of original assessment proceedings ? " Now the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely 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 obvious limitations. " Any proceedings " does not mean proceedings relating to other assessees or proceedings relating to other assessment years. The satisfaction of the Income-tax Officer must be arrived at in the course of proceedings relating to the assessee himself and to the assessment year in question. In Pt. Hazari Lal v. Income-tax Officer, this court, while interpreting the second proviso to section 34(3) of the old Income-tax Act, held that the appellate authority while dealing with an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-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 return is like a revised return pertaining to the same assessment year and the same income which the assessee was required to return originally. An assessment which is made in consequence of a notice under sectioin 34 is also a revised assessment and proceeds to compute the total income for that assessment year. The total income so computed is subject to tax and the rate at which the tax is levied is the rate applicable to the total income thus determined including the income originally assessee. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature. 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 opinion that penalty can be levied during the course of proceedings under section 34 in respect of a default committed during the original assessment proceedings and the case of Mayaram Durga Prasad does not lay down the law correctly. The same view has been taken by the Madras High Court in C. V. Govindarajulu Iyer v. Commissioner of Income-tax, by the Andhra Pradesh High Court in Commissioner of Income-tax v. Angara Satyam, by the Patna High Court in K. C. Mukherjee v. Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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