TMI Blog1971 (12) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax, the following question has been referred by the Income-tax Appellate Tribunal : " Whether, on the facts and in the circumstances of the case, the proceedings for imposition of penalty under section 271(1)(c) had been validly commenced within the meaning of section 275 of the Income-tax Act, 1961 ? " Proceedings for the imposition of penalty were taken against the assessee for concealment of income represented by cash credit entries in the accounts of four creditors during the previous year relevant to the assessment year 1963-64. The Inspecting Assistant Commissioner examined the four creditors and upon the material before him held that the explanation submitted by the assessee in respect of the cash credit en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished .... 274. (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling under clause (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The proceedings to levy penalty have, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer. Satisfaction before conclusion of the proceedings under the Act, and not the issue of a notice or initiation of any step for imposing penalty, is a condition for the exercise of the jurisdiction. " While the statute does not require any formal order recording the satisfaction of the Income-tax Officer that the assessee has committed the default mentioned in section 271(1), it is sufficient for the validity of the penalty proceeding if there is something to show that the Income-tax Officer was satisfied in the course of the assessment proceeding before the penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period is two years " from the date of completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced ". Where there is an assessment proceeding, it is urged by the assessee, the necessary implication is that the penalty proceeding must be commenced before the assessment is concluded. In our opinion, the contention is without force. No such implication can be spelled out from section 275. The section, in its essential content, is a provision prescribing the period of limitation for making a penalty order. It is not a provision prescribing the point of commencement of the penalty proceeding. It is concerned with the order which concludes the penalty proceedings. When it refers to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being satisfied in the course of any proceedings under the Act that the assessee has done one or the other of the defaults mentioned in the sub-clauses and on his being satisfied he may direct such person to pay by way of penalty the amounts indicated in the subsequent provision. Thus, the event which gives a cause of action for initiation of proceedings for imposing penalty is not held over until after the completion of assessment proceedings. " If these observations are capable of being understood to mean that the Income-tax Officer must, besides recording his satisfaction, take further action by the issue of a notice to the assessee before completing the assessment, we are unable, with respect, to agree with the proposition so laid dow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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