TMI Blog1977 (8) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer found that the assessee had concealed his income and furnished inaccurate particulars of such income. He, therefore, directed initiation of proceedings under section 271(1)(c) read with section 274 of the Income-tax Act, 1961 (hereinafter called "the Act"), and issued notice to the assessee on November 25, 1968. Thereafter, he referred the matter to the Inspecting Assistant Commissioner as the minimum penalty leviable exceeded Rs. 1,000. The Inspecting Assistant Commissioner issued notice to the assessee under section 274 read with section 271(1)(c) of the Act. The assessee appeared. After hearing him, the Inspecting Assistant Commissioner imposed a penalty of Rs. 5,600, the maximum penalty leviable being Rs. 16,720 and the mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income." The material portion of section 274 also may be quoted : "274. Procedure.--(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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 271, and it is the initiation of the penalty proceeding by the Income-tax Officer or the Appellate Assistant Commissioner, as the case may be, after his satisfaction on the concealment of income. The second stage is giving an opportunity to the person concerned of being heard and, after hearing, the levy of penalty. The second stage is contemplated by sub-sections (1) and (2) of section 274 which come into play only after the first stage, namely, the initiation of such proceedings. After the initiation of proceedings only he will issue necessary notice to the person concerned and give the latter the opportunity of being heard, and after hearing, levy penalty. But, in case the imposable penalty exceeds Rs. 1,000, the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealment read with sub-clause (c) thereof and where the minimum penalty imposable exceeds Rs. 1,000, he is bound to refer the case to the Inspecting Assistant Commissioner who is then empowered to impose a penalty in that case." In view of this decision of the Division Bench of the Calcutta High Court, the decision of the learned single judge in Ram Chandra Sarda v. Income- tax Officer [1970] 78 ITR 325 (Cal) does not appear to be good law. The Andhra Pradesh High Court in the case of Shivlal Kundanmal V. Commissioner of Income-tax [1973] TLR 520 was also of the same view. Their Lordships held : "In our considered opinion, the initiation of the penalty proceedings does not start with the issuance of notice by the Inspecting Assistant C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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