Law:

Section:

Section 271(1)(c) , read with section 274(2), of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1961-62 - On reference under section 274(2) IAC enhanced quantum of escapement of income over and above amount of concealed income of Rs. 8,000 assessed by ITO and levied penalty on total amount - Tribunal while reducing amount of undisclosed income held that no penalty was exigible in respect of sum of Rs. 8,000 - Whether section 274 does not clothe IAC with power to assess which is a pre-requisite so far as section 271(1)(c) is concerned - Held, yes - Whether, therefore, when penalty proceeding were started by ITO for concealment of Rs. 8000, IAC could not treat another amount as an item of concealment - Held, yes - Whether in view of fact that amount which was held to be exigible for penalty was found by Tribunal not to be exigible, no penalty could be levied on assessee - Held, yes FACTS The ITO initiated penalty proceedings under section 271(1)(c ) in respect of concealment of income of Rs. 8,000 and as the minimum penalty imposable was more than Rs.1,000 the case was referred to the IAC under section 274(2) who came to the conclusion that the escapement was with regard to Rs. 69,228 in addition to the aforesaid amount and, therefore, levied a penalty of Rs. 25,000. On appeal, the Tribunal reduced the quantum of penalty on the ground that out of Rs. 8,000 a sum of Rs. 3,000 had not been concealed and on the balance amount no penalty was exigible. However, it reduced the amount of undisclosed income and added it to the amount received by the directors of the firm as salaries. On reference : HELD Under section 271(1), it is only the ITO or the AAC who are concerned with the assessment, and not the IAC. Therefore, the question whether any income has been concealed or inaccurate particulars of any income have been furnished is a matter which primarily and necessarily rests with the ITO or the ACC. It is well-known that an appellate authority normally has the same powers as the original authority. Unless these powers were specifically conferred upon the IAC, it would not be proper to hold that he can probe into the question of…

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