Satish Chandra, J. - (1.) DR. M.K. Gupta, the assessee, was employed as a physician in P.L. Sharma Hospital, Meerut. During the relevant assessment year 1962-63, he was an authorised medical attendant for Central Government employees. He had private practice also. On 28th August, 1962, he filed a return in Form No. 4 disclosing his total income as Rs. 21,680 out of which a total sum of Rs. 18,000 was disclosed as the income from profession. The department received information that the assessee's income was much more. The Income-tax Officer issued a notice under Section 274(1) of the Income-tax Act, 1961, on 28th September, 1962. The assessee then filed a return in Form No. 2 on 29th November, 1962. In this return he disclosed a total income of Rs. 43,930, out of which Rs. 40,000 was declared as income from private practice.
(2.) THE Income-tax Officer computed his total income at Rs. 67,944, which included a sum of Rs. 64,014 as income from private practice. In appeal, the Appellate Assistant Commissioner reduced the taxable income by Rs. 9,000. In further appeal, the Tribunal reduced the income from private practice to Rs. 40,000. As the minimum penalty imposable exceeded Rs. 1,000, the Income-tax Officer referred the case to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner rejected the contention raised by the assessee and ultimately levied a penalty of Rs. 10,000. The assessee preferred an appeal against this order. The Tribunal held that the original return filed by the assessee on 28th August, 1962, not being in the prescribed form, was an invalid return and it call be ignored by the Income-tax Officer. Hence, no valid proceedings could be undertaken on the basis of that return. The imposition of penalty was consequently illegal.
(3.) AT the instance of the department, the Tribunal has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the penalty imposed on the assessee was invalid for the reason that the assessee had filed a return in the wrong form and that, therefore, no assessment proceedings was pending before the Income-tax Officer and consequently there was no scope for taking penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961 ?" The short question which requires our consideration is whether the return filed on 29th August, 1962, in Form No. 4 was a valid return.;