- (1.) THE following question has been referred to this court under Section 66 (1) of the Indian Income-tax Act (11 of 1922) (hereinafter called the Act) by the Income-tax appellate Tribunal (Delhi Bench 'b'):- "whether in the facts and circumstances of the case, the imposition of penalty bu the Income-tax Officer "f" Ward, (Amtitsar is bad in law?"
(2.) THE relevant facts giving rise to this reference are these: In respect of the proceedings for assessment if income-tax for the assessment years 1946-47 and 1947-48, concealed income of Rs. 47. 000 and Rs. 10,000 respectively was discovered after voluntary disclosure of an additional income of Rs. 40. 667 in each of the abovesaid years had been made by the assessee in addition to the amount of the original assessment of the income of rs. 19. 943 for the first year and Rs. 45. 824 for the second year. After the conclusion of the proceedings relating to assessment of concealed Unicom, notice, dated November 24, 1955 in respect of the assessment year 1946-47 was issued to Shri Ram Saran Das Kapur applicant (hereinafter called the assessee) under sub-section (3) of section 28 of the Act to show cause why a penalty should not be levied on the assessee for concealing the income in question. Similar notice in respect of assessment year 1947-48 was served on the assessee on December 26, 1955. In reply to the notice, dated, November 24, 1955, the assessee submitted written objections, dated April 14, 1956, in which he objected to the legality of the notice, the jurisdiction of the Income-tax Officer, the vagueness of the notice and various other matters, and in which he finally stated in the penultimate paragraph as follows:- "that a personal hearing nay kindly be given explain the case personally. " A verbatim copy of the objections, dated April 14, 1956, was sent by the assessee to the Income-tax Officer, Special Ward, Amritsar (which Income tax officer had issued and served the notice, under Section 28 (3) of the Act on the assessee) in respect of the assessment year 1947-48. It is the common case of both sides that in pursuance of the specific request contained in the written reply of the assessee, the Income- tax Officer Special Ward, gave an opportunity of personal hearing to the assessee and actually heard his arguments in support of those objections. Before the Income-tax Officer, Special Ward, who had heard the assessee, would give a decision in the matter, the case for the imposition of penalty of the assessee were transferred to the Income-tax Officer,'f' Ward Amtitsar. There is nothing to show that the assessee sent any communication or made any request to the Income-tax Officer for any further hearing. This fact is also admitted that the Income-tax officer 'f' Ward, never gave any see, and merely passed two separate orders, dated July 30, 1959, imposing a penalty of Rs. 15,000 in respect of the year 1946-47 and of Rs. 4,000 in respect of the year 1947-48. Aggrieved by the orders of imposition of penalty, the assessee went in appeal to the Appellate Assistant Commissioner of Income-tax who by his order, dated October 29, 1959, set aside the order under appeal. The Income-tax officer went up in appeal against the order of the Income-tax Appellate assistant commissioner to the Appellate Tribunal. By order, dated October 30, 1961, the Appellate Tribunal allowed he appeal of the assessing authority, set aside, he order of the Appellate Assistant Commr. and remitted the appeal of the assessee for re-hearing to the Appellate Assistant Commissioner as he had not dealt with certain objections which were raised by the Department before the Tribunal. By his post-remand order, dated September 24, 1962, the Appellate Assistant Commissioner upheld and confirmed the order of the Income-tax Officer in respect of the imposition as well as the quantum of the penalty in respect of he two years in dispute. In the assesses appeal preferred against the post-remand order of the appellate Assistant Commissioner, the Appellate Tribunal by its judgment, dated September 23, 1963, repelled all the contentions of the assessee. The contention of the assessee with which we are concerned was disposed of in sub-paragraphs (ii) and (iii) of paragraph 6 of the appellate tribunal's final order in the following words: " (ii) We have already noted above that the assessee besides filing a written explanation dated aril 14, 1956, requested that he may be heard personally. The Income-tax officer did hear him personally on august 27, 1957. Thereafter the case went to the jurisdiction of the Income-tax Officer, F-Ward. Section 5 (7-C) lays down that where an income-tax authority ceases to exercise jurisdiction and is succeeded by another, the income-tax authority so succeeded may continue the proceeding from the stage at which the proceedings was left by his predecessor. The first proviso to the sub-section lay's down that the assessee concerned may demand that before the proceeding is so continued the previous proceedings or any part thereof be-opened. We find that no such demand was made by the assessee (before the income-tax Officer, F-Ward Shri Guijar Malwho passed the penalty order on July 30, 1959) to the effect that the assessee be re-heard or any part of the previous proceeding be re-opened. In these circumstances the Income-tax Officer F-ward Shri Guijar Mal was perfectly justified in law in passing the penalty order. (iii) In support of his contention the learned counsel for the assessee relies upon the ruling of the Calcutta High court in the case of Calcutta Tanneries, (1944) Ltd. Calcutta v. commissioner of Income-tax Calcutta, reported in 1960-40 ITR 178 = (AIR 1960 Cal 543), where the facts of the case were almost identical to those of the assessee. This ruling has been considered and dissented from by their Lordships of the Patna High court in the case of Murlidhar Tejpal v. Commissioner of Income-tax , Patna reported in 1961-42 ITR 129 (Pat ). Respectfully following the later ruling of the Patna High court, we would hold that the penalty order was validity passed by the income-tax Officer, F-Ward. " It was the question of law decided in the above quoted passage of the order of the Appellate Tribunal which was sought by he assessee to be referred to this court in the assesses application of the assessee was allowed and the present reference was made by the Tribunal on July 10, 1964.
(3.) THE relevant questions of fact which have been decided by the Tribunal and with which findings we are bound and on the basis of which we have to answer the question referred to us, are summarised below: (i) that the notices under Section 28 (3) of the Act calling upon the assessee to sub-section (1) of S. 28 should not be imposed on the assessee were issued and served by the Income-tax Officer, special ward, Amritsar; (ii) that two separate written replies to the abovesaid show-cause notices were sent by the assessee to the Income-tax officer, Special Ward, on April 14, 1956; (iii) that a specific prayer had been made by the assessed in writing in paragraph 9 of each of his written replies to the show-cause notices for being afforded "a personal hearing" so as to enable the assessee "to explain th cease personally. " (iv) that the opportunity asked for by the assessee was duly granted to him and the assessee did actually show cause against the threatened imposition of penalty at the oral hearing availed of by him before the Income-tax Officer, Special Ward; (V) that no decision in this respect was given by the Income-tax Officer, Special ward, who heard the assessee and the jurisdiction to levy penalty on the assessee subsequently stood transferred to Shri Gujjar Mal Income-tax Officer F-Ward; (Vi) that before shri Gujjiar Mal, income-tax officer "f" Ward, no request was made by the assessee under S. 5 (7-C) of the Act either for re-hearing any of the two cases or for affording the assessee a re-hearing of either of the two cases; (Vii) that the Income-tax officer, "f" ward, did not afford the assessee any opportunity of personal hearing; (Viii) that on the record o the case received by him on transfer from the Income-tax Officer, special Ward, the assessing authority. e. , the income-tax officer "f" Ward, imposed penalties on the assessee without any further proceedings or hearing.;