ANANTHA NAGANNA CHETTY Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH HYERABAD
HIGH COURT OF ANDHRA PRADESH
ANANTHA NAGANNA CHETTY
COMMISSIONER OF INCOME-TAX , ANDHRA PRADESH, HYDERABAD
Click here to view full judgement.
Gopal Rao Ekbote, J. -
(1.)This is a reference made under Section 66(2) of the Income-tax Act, 1922 and arises in the following circumstances: The assessee is an individual. The assessment year is 1949-50. The assessee derived income form property, business, and share income form firms in which he was partner. he, however, failed to disclose his 14/16th share in the firm of Messrs. Revenue Siddeswara Oil Company for the assessment year. He contended that he had nothing to do with the firm and that he was a mere financier and that he was receiving only interest on the amount which he had supplied to the firm. This contention was rejected. He was ultimately assessed on the share of income form that film also. The department had also initiated penalty proceedings against the assessee for his omission to account for the share income from the said firm. The explanation of the assessee was that he has not concealed any particulars of his income and that he had advanced certain moneies to the firm by way of loan charging interest therefore. he also stated that the firm since has been dissolved no penalty therefore was eligible. After this explanation was filed, the Income-tax Officer, who had issued the notice under S. 28 93) was transferred and was succeeded by a new Income-tax Officer without issuing any notice or informing the assessee of this intention to continue the proceedings passed the order levying penalty on the assessee. The assessee took up the matter in appeal to the Appellate Assistant Commissioner. he confirmed the order of the Income -tax Officer. On a further appeal to the Appellate Tribunal, it was contended that the order of the succeeding Income-tax Officer levying penalty on the assessee without the issue of a notice was illegal. The Tribunal went into the merits of the case and while considering the abovesaid contention found that although with the change of Income-tax Officer no intimation was sent to the assessee, that does not in any was vitiate the proceedings. If the assessee had elected, he could have requested the Income-tax Officer to proceed afresh but he did not do so. The Tribunal further observed that as the assessee had not taken up the plea before the Appellate Assistant Commissioner, the Tribunal refused to entertain the plea at that late stage, although earlier it expressed its opinion. The assessee thereafter filed an application before the Tribunal for reference. By its order dated 7-11-1962 the Tribunal refused to make a reference as in its opinion the case did not involve any legal principle or interpretation of any law. The assessee thereafter filed an application under Section 66(2) of the Act before this Court and this Court directed the Tribunal to state the case. The Tribunal has accordingly submitted the statement of the case dated 17-8-1965.
(2.)The question, which must necessarily be answered in this reference, is whether the levy of penalty by the succeeding officer without giving notice to the assessee is valid.
(3.)n order to provide a correct answer to this question, it is necessary to read Section 28(3) and Section 5(7-C) of the Income-tax Act, 1922. Section 28(3):--- No order shall be made under sub-section 910 or sub-section 920 unless the assessee or partner, as the case may be, has been hear, or had been given a reasonable opportunity of being heard. Section 5(7-C):----- Whenever in respect of any proceeding under this Act an Income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the Income-tax authority so succeeding may continue the proceeding form the stage at which the proceeding was left by his predecessor: Provided that the assessee concerned may demand that before the proceeding is so contained the previous proceeding or any part thereof be re-opened or that before any order for assessment is passed against him he be re-heard: provided further that in computing the period of limitation for the purpose of sub-section (3) of Section 34, the time taken in re-opening the whole or any part of the proceeding or in giving an opportunity to the assessee to be re-heard under the proceeding proviso shall be excluded."
Copyright © Regent Computronics Pvt.Ltd.