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TMI Blog1973 (1) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 1,000, the Income-tax officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty." My attention was next drawn to a Division Bench judgment of this court in the case of Commissioner of Income-tax v. A. K. Das . In that decision after stating the relevant statutory provisions P. B. Mukharji J. (as he then was), observed at page 47 of the report as follows: "Certain results follow from a provision of this nature. The first is that the authority, prima facie, belongs to the Income-tax Officer. It is before him that the first foundations of penalty are laid. That foundation is his ' satisfaction ' in the course of assessment proceedings that there has been concealment. He is therefore, the fons et origo of this penalty proceeding, Unless he initiates or the Appellate Assistant Commissioner initiates, the Inspecting Assistant Commissioner cannot initiate. In the natural context that is what should be when one remembers that af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the condition precedent for the exercise of power under section 274(2) of the Act being absent, the impugned notice referring the case to the Inspecting Assistant Commissioner must be held to be entirely without jurisdiction and void. Mr. Bhattacharjee also submitted that any material contained in the order of assessment which was passed on a date subsequent to the issue of the notice could not be called in aid of the satisfaction of the Income-tax Officer at the time of the issue of the impugned notice. Lastly, it was submitted by Mr. Bhattacharjee that section 271 read with section 274 of the Act requires that before a notice under section 274(2) is issued the Income-tax Officer must be "satisfied ". He drew my attention to the impugned notice which contains, inter alia, the following expression: "Whereas it appears to me that you have concealed the particulars of your income .... " The expression " it appears to me ", according to Mr. Bhattacharjee, was not the same as the expression " I am satisfied ". Therefore, it was submitted that the notice has not been issued in compliance with the provisions of section 271 read with section 274 of the Act. I must note at the ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that some of the books produced by the assessee were found to be very unsatisfactory and in fact some of the books were impounded under section 131(3) of the Act. There were also certain interpolations noticed in the books of account which were recorded in the order-sheet of the assessment file of the petitioner. Various discrepancies were found in these books and the representatives of the were called upon to explain such discrepancies. They were, however, unable to explain the discrepancies. The assessee was required to produce its general ledger, journal and cash book which the assessee failed and neglected to do on the pretext that the said books were under the custody of the assessee's solicitor under the order of the Company Tribunal dated the 3rd August, 1966. Thereupon, notices were issued to the petitioner's solicitor to produce the same books. Paragraph 2(c) of the affidavit of Mr. Chatterjee affirmed on the 16th December, 1972, is worth quoting in full : " Furthermore, in the course of the examination of the books and documents, it became very clear and I was satisfied that the assessee had deliberately concealed material particulars of its income and had also delibe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were materials before him on the basis of which he could have arrived at a prima facie satisfaction that the penalty imposable in the instant case would exceed Rs. 1,000. In this connection the concluding portion of the order of assessment may be noted: "Penalty proceedings under section 271(1)(c) have already been initiated for several concealments discussed in the order." It must be noted that the hearing of the assessment case of the petitioner for this year went on for several months. Large number of days were spent in scrutinizing the books of account of the petitioner. As already noted, some of the books of account had been impounded. The Income-tax Officer had formed the view that not only was the assessee concealing a large number of the relevant books of account, but there were various interpolations and discrepancies in the books which were produced and which could not be explained to the satisfaction of the Income-tax Officer. The last hearing of the assessment case took place on the 25th March, 1967. Taking all these things into consideration, it will, in my view, be perfectly legitimate to presume that by the time the hearing of the case was concluded, and before th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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