Law: Income Tax Act, 1961

Section: 131,133A,272A,276C,276CC

Income-tax----Penalty---Prosecution---Survey---Survey conducted at school premises--¬Summons issued to correspondent of school---Notice to show cause against penalty and prosecution---No tax determined or levied or demand raised against correspondent or school---Proposal of penalty or prosecution not permissible---Indian Income Tax Act, 1961, Ss.131, 133A, 272A, 276C & 276CC. The petitioner was the correspondent of a school. She was served a notice, dated March 15, 1996, issued by the Income-tax Officer, requiring her to show cause why penalty should not be imposed on her under section 272-A(1)(c) of the Income Tax Act, 1961. The notice mentioned that a survey had been conducted at the school premises on March 13, 1996, under section 133A of the Act, that summons had been served on her on March 14, 1996, under section 131 of the Act for her attendance and production of documents. The notice also stated that failure to attend on March 19, 1996, would entail levy of penalty and prosecution under sections 276C and 276CC of the Act. The petitioner filed a writ petition. In its counter-affidavit, the Department stated that it had not determined, raised or levied any tax whatsoever, nor taken any recovery proceedings against the petitioner in her individual status or even against the school: Held, allowing the petition, that when the Department had specifically stated that there was no demand of tax, no levy or any recovery proceedings either against the petitioner in her individual status or for that matter even against the school, the notice proposing to levy penalty for failure to attend the enquiry and also to -prosecute the petitioner under sections 276C and 276CC was clearly impermissible in law. There was no nexus between the action proposed to be taken under. the notice and the facts admitted in the counter-affidavit. The proposed action to prosecute, the petitioner under sections 276C and 276CC could not, in any manner; be justified in the absence of there being any assessment, demand or recovery proceedings. As no proceedings were pending against the school before the Income-tax Officer, the summons issued prior to the notice was itself invalid and,…

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