Law:

Section:

Section 271(1)(c), read with section 274, of the Income-tax Act, 1961 - penalty - For concealment of income - Whether, after having referred to IAC penalty proceedings under section 274(2) [prior to its omission with effect from 1-4-1976] for default under section 271(1)(c), ITO could issue show cause notice for levy of penalty by him - Held, no Facts In the course of assessment proceedings for the assessment years 1969-70 and 1973-74, the ITO noticed that the assessee-petitioner had concealed the particulars of its income. He consequently issued two notices on 29-11-1975 to the assessee intimating that the case for levy of penalty was being referred to the IAC under section 274(2) [prior to its omission with effect from 1-4-1976] before whom further proceedings in regard to levy of penalty would take place and asking to show cause why a penalty should not be levied for the default under section 271(1)(c). On writ, the petitioner challenged the validity of impugned notices on the ground (i) that two simultaneous proceedings before the ITO as also before the IAC were unknown to law; and (ii) that initiation of two simultaneous proceedings showed the non-application of mind by the ITO. Held The assessment order for the assessment year 1969-70 shows that the assessee had an income of Rs. 28,463 from undisclosed sources. The ITO, therefore, after proper application of mind, rightly decided to initiate penalty proceedings for concealment under section 277(1)(c) and to refer the matter to the IAC under section 274(2) for imposing penalty. However, after having referred the matter to the IAC, the ITO had no jurisdiction to ask the assessee to appear before him and to show cause against imposition of penalty for the said default. It was for the IAC to continue further penalty proceedings. Section 273 [as it stood before 1-6-1978], read with section 147(a), of the Income-tax Act, 1961 - penalty - For failure to furnish estimate of advance tax - Assessment years 1969-70 and 1973-74 - Whether regular assessment under section 273 covers cases of reassessment under section 147 - Held, yes - Whether ITO had jurisdiction to issue impugned penalty notices in proceedings…

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