GOPICHAND SARJUPRASAD Vs. UNION OF INDIA
LAWS(MPH)-1969-1-4
HIGH COURT OF MADHYA PRADESH
Decided on January 24,1969

GOPICHAND SARJU PRASAD Appellant
VERSUS
UNION OF INDIA Respondents

JUDGEMENT

Dixit, C.J. - (1.) BY this application under Articles 226 and 227 of the Constitution the petitioner M/s. Gopichand Sarju-prasad, a registered partnership firm, seeks a writ of certiorari for quashing an order dated 5th January 1966 of the Inspecting Assistant Commissioner of Income-tax, Jabalpur, imposing on the petitioner a penalty of Rs. 25000 under Section 271 (i) (c) of the Income-tax Act, 1961 (hereinafter referred to as the Act), for concealing income and deliberately furnishing inaccurate particulars of the same for the assessment year 1959-60. The order of the Inspecting Assistant Commissioner was upheld in appeal by the Appellate Tribunal, Allahabad, and a writ of certiorari has been sought for quashing the Tribunal's order also.
(2.) THE material facts are that for the assessment year 1959-60 the petitioner filed a return of its income under Section 22 (2) of the Income-tax Act, 1922, on 21st October 1959 showing an income of Rs. 7,896. THE assessee took forest contracts. It ran a saw-mill and also manufactured and sold furniture. It also did stone quarrying business. In the assessment proceedings the Income-tax Officer noticed some discrepancies in the accounts and registers maintained by the assessee of its business and called upon the assessee to explain the discrepancies and furnish certain particulars. THEreupon, the assessee filed a revised return of its income on 17th January 1964 disclosing its total income as Rs. 50,605. THE Income-tax Officer finalized the assessment on 19th March 1964 on a total income of Rs. 84.475 after taking into consideration the revised return and issued a notice to the petitioner under Section 271 (1) (c) of the 1961 Act for concealment of income. As the minimum penalty imposable on the petitioner exceeded Rs. 1,000 the Income-tax Officer referred the matter to the Inspecting Assistant Commissioner of Income-tax under Section 274 of the Act. The Inspecting Assistant Commissioner finding that the assessee had concealed the particulars of its income made the impugned order imposing a penalty of Rs. 25,000 on the petitioner. The petitioner then preferred an appeal before the Tribunal which was dismissed. The Tribunal has at the instance of the assessee made a reference (Misc. Civil Case No. 19 of 1968) to this Court under Section 256 (1) pf the Act propounding the following question for decision:-- "Whether on the facts and circumstances of the case penalty under Section 271 (1) (c) read with Section 274 of the Income-tax Act, 1961, could be imposed on the assessee for the assessment year 1959-60?" As the vires of Section 297 (2) (g) of the Act cannot be challenged by the petitioner in the reference made by the Tribunal at the instance of the petitioner, this petition has been filed challenging the legality of the order of the Inspecting Assistant Commissioner, upheld by the Tribunal, on the ground that Section 297 (2) (g) offends Article 14 of the Constitution and is, therefore, invalid. The petitioner has raised two contentions: first, that Section 297 (2) (g) being violative of article 14 of the Constitution is invalid and, therefore, no penalty could be imposed on the petitioner under Section 271 of the Act; and, secondly, that under Section 271 (1) a penalty can be imposed by the Income-tax Officer or the Appellate Assistant Commissioner only if he, in the course of any proceedings under the Act of 1961, is satisfied that any person has committed any of the acts enumerated in Clauses (a), (b) or (c) of Section 271 (1); that as the assessment against the petitioner was made under the Act of 1922 and not under the Act of 1961, the Income-tax Officer or the Appellate Assistant Commissioner had no jurisdiction to impose any penalty under Section 271 (I).
(3.) IN order to understand the petitioner's objections it is first necessary to refer to the material provisions of the 1961 and 1922 Acts. Sub-section (1) of Section 297 of the 1961 Act repeals the 1922 Act; then Sub-section (2) enumerates the "savings". That sub-section, so far as it is material here, is as follows:-- "(2) Notwithstanding the repeal of the INdian INcome-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act),-- (a) Where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed; * * * * * (f) Any proceeding for the imposition of a penalty in respect of any assessment completed before the 1st day of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed. (g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act;" The material portion of Section 271 (1) runs thus:-- "271(1). If the INcome-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-- (a) ***** (b) ***** (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-- (i) * * * * * (ii) * * * * * (iii) IN the 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 part of Section 28 (1) of the 1922 Act was in the following terms:-- "28(1) If the INcome-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person-- (a) * * * * * (b) * * * * * (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. he or it may direct that such person shall pay by way of penalty, in the case referred to in Clause (a), in addition to the amount of the income-tax and supertax, if any, payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in Clauses (b) and (c) in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the in come-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income: * * * *" It will be seen that the effect of Clauses (a), (f) and (g) of Section 297 (2) is that where the assessee files a return of income before the commencement of the Act of 1961 that is before 1st April 1962, for any assessment year, then the assessment of that person for that year is under the 1922 Act; any proceeding for the imposition of a penalty in respect of any assessment completed before 1st April 1962 can be initiated and penalty can be imposed under the 1922 Act; any proceeding for the imposition of a penalty in respect of any assessment for the year ending on 31st March 1962 or any earlier year which is completed on or after 1st April 1962 can be initiated and penalty can be imposed under the 1961 Act. In the present case, the petitioner filed a return of income before 1st April 1962 but the assessment was completed on 19th March 1964, that is after 1st April 1962. Therefore, Clause (g) of Section 297 (2) was plainly attracted for the initiation of proceedings for imposition of penalty under the Act or of 1961 as held by this Court in Kishanlal v. Commissioner of Income-tax, 1967 64 ITR 285 and Comrnissioner of Income-tax, M. P. v. Champalal, 1969 MPLJ 41 = (AIR 1969 Madh Pra 72).;


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