Law:

Section:

Section 143 [Corresponding to section 23(3) of the Indian Income-tax Act, 1922] read with section 271(1)(c) of the Income-tax Act, 1961 - Assessment - General - Assessment year 1961-62 - Assessee filed its return before 1961 Act came into force - Assessee later filed a revised return after commencement of 1961 Act - ITO made assessment under section 143(3) of 1961 Act instead of under section 23(3) of 1922 Act - On basis of additions made, IAC also imposed penalty under section 271(1)(c) of 1961 Act - Tribunal set aside assessment on ground that it had not been made under appropriate provision of law - Tribunal also cancelled penalty imposed on assessee holding that expression any proceeding under the Act' in section 271(1)(c) of 1961 Act referred to a valid proceeding, and since assessment proceedings were void in law, no penalty could be imposed - Whether provisions of section 23(3) of 1922 Act are in pari material with provisions of section 143(3) of 1961 Act and deal with same subject-matter, i.e., assessment and, therefore, ITO's order passed under section 143(3) of 1961 Act could be legitimately held to have been passed in exercise of powers vested in ITO under section 23(3) of 1922 Act - Held, yes - Whether, therefore, Tribunal was wrong in cancelling assessment order as well as penalty order - Held, yes FACTS For the assessment year 1961-62, the assessee filed its return before coming into force of the 1961 Act and later submitted a revised return on 15-11-1962, declaring income at a higher figure. The ITO made the assessment under section 143(3) of the 1961 Act instead of under section 23(3) of the 1922 Act. Admittedly, according to the provisions of section 297(2)(a), the assessment had to be made under section 23(3) of the 1922 Act. The IAC having found that addition was made as income from undisclosed sources, imposed penalty on the assessee under section 271(1)(c). On appeals, the Tribunal set aside the assessment order, holding that the same could not be assumed to have been passed under section 23 of the 1922 Act and was, therefore, without jurisdiction and void in law. It further cancelled the penalty, holding that the expression 'any proceeding…

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