TMI Blog2001 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... cond notice of assessment under section 148 is in order?" The assessee is an individual carrying on business in the purchase and sale of handloom clothes. For the assessment year 1976-77, the assessee filed the return of income on June 12, 1977, declaring a total income of Rs.1,43,470. The assessment was completed on June 4, 1979, determining the total income at Rs.7,22,350. During the assessment proceedings. it was found that the assessee had concealed an amount of Rs.57,294. Hence, penalty proceedings were initiated under section 271(1)(C) of the Income tax Act (hereinafter referred to as "the Act"). The assessment order was challenged in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation. The assessee took up the contention that the assessment order was passed on June 4, 1979, and the order of penalty was passed on March 24, 1988. Thus, the order was passed beyond two years from the end of the financial year in which the original assessment was completed. Further, it was contended that no penalty could be passed on the basis of the return in which the assessee included Rs.57,294 and hence, there was no concealment. Learned counsel for the assessee submitted that if the time is calculated from the assessment proceedings pursuant to the reopening, there will not be any limitation. But learned counsel submitted that originally notice for imposition of penalty was issued during the original proceedings. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve observations in N. A. Malbary and Bros. v. CIT [1964] 51 ITR 295. In that case, what happened was that the assessee, a firm which carried on business at Surat and had a branch at Bangkok, in its return for the assessment year 1951-52 did not include the profits of the Bangkok business. Nor did it comply with the notice of the Income-tax Officer for the production of the accounts relating to the Bangkok branch. The Income-tax Officer estimated the profits of the Bangkok branch at Rs.37,500 and completed the assessment on January 31, 1952, and on the same day he initiated proceedings for the imposition of penalty for concealment of income. The assessee offered its explanation on March 11, 1952, but its explanation was rejected and a penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income and pass another order imposing the higher penalty. The jurisdiction to make the second order was not lost because he had omitted to recall the earlier order, although the two orders could not be enforced simultaneously or stand together". In the above case, the decision of the Madras High Court was cited. There, the Lordships made the following observations: "There it was argued that the original proceeding under section 23(3) and a proceeding under section 34 in respect of the same period were different and in the latter proceeding a penalty could not be imposed for a concealment in respect of the original proceeding. Rajamannar C. J. rejected this contention and held, 'that so long as the proceedings under section 34 relate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings were initiated. The assessee filed a return which showed a larger income from the Bangkok business than had been estimated before and this was accepted. The Income-tax Officer initiated penalty proceedings again and levied a penalty with reference to the difference between the income originally returned and the income finally reassessed. If the arguments of Sri Ahuja were correct, there could have been no penalty at all imposed on such reassessment as there was no concealment in the reassessment proceedings. This court, however, upheld the imposition of the penalty with reference to the original return but it was observed that, if a penalty had been levied earlier in the course of the original assessment proceedings, that penalty o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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