9911796707
TMI Blog1963 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of which the accounting year was the calendar year 1950. The assessee carried on business at Surat. It had a branch at Bangkok to which it exported cloth from India. The branch also made purchases locally and sold them. During the last world war the business at Bangkok had been in abeyance but it was re-started after the termination of the hostilities. In its return for the assessment year 1949-50 the assessee did not include any profit of the Bangkok branch but stated that the books of account of the Bangkok branch were not available and that therefore its profit might now be assessed on an estimate basis subject to action under section 34 or section 35 on production of statement of account. The assessment was thereupon made on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings for the year 1952-53 had commenced and this year also the assessee adopted a similar attitude as in the previous years. The Income-tax Officer was however insistent and, therefore, after various adjournments, the assessee had on August 7, 1953, to produce the accounts and books of the Bangkok branch. It appeared from these books that in the calendar year 1950 the assessee had made a profit of Rs. 1,25,520. The Income-tax Officer thereupon commenced proceedings under section 34 of the Act against the assessee in respect of the assessment year 1951-52 and gave notice to the assessee to submit a return. The assessee then submitted a return stating therein correctly the profits forthe calendar year 1950. The Income-tax Officer co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter, the assessee obtained a reference to the High Court of the question which we have set out at the beginning of this judgment. That question, it will be noticed, referred only to the penalty of Rs. 68,501 imposed pursuant to the second notice under section 28(3) for concealing the particulars of the income of 1950. It has to be observed that in the return that was filed in the proceedings started under section 34, the assessee furnished correct particulars and it also produced the books. So it had not committed any default in connection therewith. The notice must therefore be taken to have been in respect of the original concealment of the income. The assessee knew---and this is what was found by the Tribunal and that is a finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of penalty would not stand but it is not a question of jurisdiction. The penalty under the section has to be correlated to the amount of the tax which would have been evaded if the assessee had got away with the concealment. In this case having assessed the income by an estimate, the Income-tax Officer levied a penalty on the basis of that estimate. Later when he ascertained the true facts and realised that a much higher penalty could have been imposed, he was entitled to recall the earlier order and pass another order imposing the higher penalty. If he had omitted to recall the earlier order that would not make the second order invalid. He had full jurisdiction to make the second order and he would not lose that jurisdiction because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round open to him under section 28(1), even though it relates to the prior proceeding ". He however proceeded to observe, " There may be one possible qualification of his power, and that is when the default or the act which is the basis of the imposition of the penalty was within the knowledge of the officer who passed the final order in the prior proceeding and if that officer had failed to exercise his power under section 28 during the course of the proceeding before him. Possibly in that case be would have no power." Learned counsel for the appellant relied on this latter observation in support of his contention. We do not think that Rajamannar C.J. wished to state this qualification on the power of the Income-tax Officer as a propositio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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