- (1.) THE matter here pertains to the imposition of penalty under Section 271 (1) (c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), after the deletion of Section 274 (2) of the Act, by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. There is also a question of limitation raised with regard to the penalties imposed.
(2.) THE two assessment years in question here are 1967-68 and 1968-69. The Inspecting Assistant Commissioner of Income-tax levied a penalty of Rs. 1,200 in respect of the assessment year 1967-68 and Rs. 17,000 for the assessment year 1968-69 under Section 274 read with Section 271 (1) (c) of the Act. The penalties imposed stand challenged on legal ground. The necessary dates and information relevant to the controversy for the two assessment years in question are as under : Assessment Assessment Year Year 1967-68 1968-69 " Return filed 22-9-1967 5-9-1968 ( Origin l ssessment completed 19-8-1969 21-1-1970 ( Return in response to 12-7-1971 12-7-1971 noticeunder section 148 ( Assessment under section147 ( 29-3-1975 29-3-1975 ) re d with section144. ( Penalty proceedings initi tedon 29-3-1975 29-3-1975 ( Application d ted M rch 31-3-1975 31-3-1975 31,1975 under section 146 ( Penalty proceedings in rel 31-3-1975 31-3-1975 tionto the ssessmentorder d ted M rch 29,1975 dropped on ( Fresh ssessment in pursu 28-2-1976 28-2-1976 nceof ccept nce of section146 pplic tion ( Penalty proceedings initi tedon 28-2-1976 28-2-1976 ( Reference under section274 (2) 23-2-1978 23-2-1978 of the Income-t x ct, 1961, by the Income-t x Officer to the Inspecting ssist nt Commissioner ( Notice by the Inspecting ssist 25-2-1978 25-2-1978 nt Commissionerunder section 274 ( Penalty imposed 18-3-1978 18-3-1978
(3.) THE assessee, in the first instance, challenged the penalties imposed on the ground of limitation. This was repelled by the Tribunal leading to the following two questions being referred for the opinion of this court: " (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the order of the Inspecting Assistant Commissioner dated March 18, 1978, imposing a penalty of Rs. 1,200 under Section 271 (1) (c) was not time-barred under Section 275 (b) and, therefore, not void ab initio ? (ii) Whether, in view of the fact that the Income-tax Officer had once exercised his discretion in the matter of imposition of penalty under Section 271 (1) (c) by dropping the penalty proceedings, vide his order dated March 31, 1975, the Tribunal was right in law in holding that penalty proceedings for the default which was existent even before the Income-tax Officer exercised his discretion, vide his order dated March 31, 1975, could again be initiated for the same default ?";