Salil Kumar Datta, J. - (1.) This is an appeal from the judgment and order of Sabyasachi Mukharji J. dated April 19, 1972, allowing an application under Article 226 filed by the respondent-firm.
(2.) The respondent-firm's income was assessed on March 30, 1967, for the assessment year 1962-63, at Rs. 11,35,425 by the ITO, 'A' Ward, District Howrah. In the course of assessment proceedings on March 23, 1967, the respondent was informed by notice that as it appeared to the said ITO that the respondent had concealed his income for the assessment year 1962-63, the penalty proceedings in respect thereof was being referred to the Inspecting Assistant Commissioner of Income-tax (for short IAC), Range XX, under Section 274, Sub-section (2), of the I.T. Act, 1961. The respondent objected to the notice challenging the legal validity thereof. Thereafter, by a notice dated November 5/6, 1968, the IAC, Range XXII, called upon the respondent to appear before him on November 26, 1968, and to show cause why a penalty should not be imposed on the firm under Section 271(1 )(c) of the Act. A similar notice dated February 24,1969, was again served on the respondent fixing March 7,1969, for hearing for the purpose. The respondent objected to the said notice by his written objection dated March 3,1969, contending, inter alia, that the IAC, Range XXII, had no jurisdiction to issue such notice.
(3.) Thereafter, on March 6, 1969, the respondent filed an application under Article 226 of the Constitution and contended that in the aforesaid circumstances the IAC, Range XXII, not having initiated the proceedings, he was incompetent in law to do so. Further, there was no satisfaction on the part of the IAC, Range XXII, about the alleged concealment of income by the respondent. The IAC, Range XXII, it was also contended, had no jurisdiction to issue notices under Section 274(2) since the penalty proceedings were not referred to him by the ITO. The respondent accordingly prayed for a writ in the nature of mandamus commanding the ITO, 'A' Ward, Howrah, the IAC, Range XXII, and the Commissioner, West Bengal III, to cancel or withdraw the aforesaid notices, and also for a writ in the nature of certiorari quashing the penalty proceedings against the firm. On the application a rule nisi was issued by this court on March 6, 1969, in terms of the prayer. There was an interim order giving leave to the concerned authority to commence and conclude the proceedings as notified subject to the condition that the final order, if made, in such proceedings was not to be communicated or enforced pending disposal of the rule.;