TMI Blog1984 (2) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 271(1)(c) of the I.T. Act were initiated. The ITO referred the case to the IAC under s. 274(2) of the I.T. Act on June 28, 1971, as the minimum amount of penalty imposable in the case exceeded the sum of Rs. 1,000. He simultaneously informed the assessee that he had referred the case to the IAC. The IAC issued a notice to the assessee on July 16, 1971, under s. 274(1) read with s. 271 of the I.T. Act to show cause why penalty should not be imposed under s. 271(1)(c), fixing the date of hearing on July 20, 1971. He ultimately imposed a penalty of Rs. 6,000 under that provision. The order was challenged by the assessee before the Tribunal. The assessee raised two main contentions before the Tribunal. The first contention was that as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation ? We propose to deal with question No. 1 first. Before going into the submissions made by the learned counsel on behalf of the respective parties, it would be necessary to take a brief look at the relevant provisions of the I.T. Act. Chapter XXI of the I.T. Act deals with penalties imposable. Section 271 in that Chapter deals with the power of the ITO or the AAC to impose a penalty for failure to comply with a notice, concealment of income and so on. It is not necessary to set out the provisions of s. 271. Suffice it to say that s. 271(1)(c) read with s. 274 provides that if the ITO or the AAC in the course of any proceedings under that Act is satisfied that any person has concealed the particulars of his income or furnished ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the IAC, who, on such reference, got the jurisdiction to impose such penalty. By the amendment it was provided that only in a case where the income, in respect of which the particulars had been concealed or inaccurate particulars had been furnished, exceeded a sum of Rs. 25,000, the ITO had no jurisdiction to impose the penalty but had to refer the matter to the IAC for the imposition of penalty. Prior to the amendment, the jurisdiction of the ITO was limited to cases where the minimum penalty imposable was Rs. 1,000 or less, whereas after the amendment it was limited to cases where the concealed income or income in respect of which inaccurate particulars had been furnished did not exceed sum of Rs. 25,000. One thing is clear that in cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a reference involved a conscious decision by the ITO that he did not have the jurisdiction to impose a penalty, because it was only on that conclusion that reference could have been made to the IAC. We now propose to consider the two cases, one of which was relied upon by Mr. Joshi and the other by Mr. Patil. Mr. Joshi placed reliance on the decision of a Division Bench of the Punjab and Haryana High Court in CIT v. Mela Ram Jagdish Raj Co. [1981] 132 ITR 897. In that case it was held that it is the satisfaction of the ITO in the course of assessment proceedings regarding the concealment of income which constitutes the basis and foundation of the proceedings for the levy of Penalty. The issue of a notice or making a reference under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars had been furnished exceeded a sum of Rs. 25,000. We fail to see how in arriving at such a satisfaction after considering the matter, the ITO could be said to be performing a mere ministerial act. Moreover, as pointed out by a Division Bench of the Delhi High Court in the case of CIT v. Kundan Lal reported in [1983] 144 ITR 547 (at p. 554), the ITO may issue a penalty notice thinking that the several additions made by him attract penalty, but the assessee's reply to the show-cause notice may convince him that only some and not all the additions warrant the penalty, If after consideration of the assessee's reply he comes to the conclusion that the concealed income is less than Rs, 25,000, he cannot refer the case to the IAC although wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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