TaxTMI 
TaxTMI 
1969 (12) TMI 32
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....alty issued by the respondent, the Income-tax Officer, under sections 271 and 2764 of the Income-tax Act, 1961. The assessment of the petitioner for the assessment year 1960-61 was completed under section 23(3) of the Income-tax Act, 1922, on 27th February, 1965. Subsequently, a notice dated the 26th February, 1965, under section 274/271 of the Income-tax Act, 1961, was received by the petitioner to show cause why penalty should not be levied for concealing particulars of income or deliberately furnishing inaccurate particulars of such income in respect of the assessment year 1960-61 and this rule was obtained on the 15th February, 1968. The Indian Income-tax Act, 1922, was repealed by section 297(1) of the Income-tax Act, 1961, which ca....
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....ome or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty---certain amounts are provided for---in each of the aforesaid cases of default according to certain percentages of the income that might have escaped assessment. Section 274 provides that no penalty should be imposed without giving the assessee an opportunity of being heard, while section 275 provides a period of limitation of two years from the date of completion of the assessment proceedings for imposing penalty. The corresponding provisions in the repealed Act are in section 28, more or less similar to the provisions in the aforesaid sections 271 and 274, the substantial difference being that there was no bar of limitation i....
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....er section 271 of the new Act even in cases where the assessment had been made under the provisions of the repealed Act. In three unreported decisions of this court in Narendra Sharma v. Income-tax Officer, In re Sardarmull Kankaria (unreported) and In re Bansidar Durgadutt (unreported) T. K. Basu J., while expressing no opinion on the constitutional validity of section 297(2)(g), had accepted the second contention of Dr. Pal, viz., that no penalty proceedings could be initiated under section 271 of the 1961 Act, where the assessment had been made under the provisions of the repealed Act of 1922. I am told that P. K. Banerji J. has also followed the aforesaid decision of T. K. Basu J. On the authorities I was inclined to accept Dr. Pal's....
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....n account of its failure to furnish the return within time. By an order dated November 19, 1966, the Income-tax Officer imposed a penalty of Rs. 1,03,434 under section 271(1)(a) of the 1961 Act. The firm having appealed in vain against the order of penalty applied under article 226 of the Constitution challenging the validity and constitutionality of, inter alia, section 297(2)(g) and section 271(2) of the 1961 Act. The High Court having rejected the application the firm went up on appeal to the Supreme Court. After setting out the relevant provisions of the 1922 Act and of the repealing Act of 1961 and after discussing the contentions raised on behalf of the appellant, the Supreme Court pointed out the differences in the provisions for ....
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.... out for special treatment. It is obvious that for the imposition of penalty it is not the assessment year or the date of the filing of the return which is important but it is the satisfaction of the income-tax authorities that a default has been committed by the assessee which would attract the provisions relating to penalty. Whatever the stage at which the satisfaction is reached, the scheme of sections 274(1) and 275 of the Act of 1961 is that the order imposing penalty must be made after the completion of the assessment. The crucial date, therefore, for purposes of penalty, is the date of such completion....We are clearly of the view, in concurrence with the decisions in Gopi Chand Sarjuprasad v. Union of India and Income-tax Officer, A....
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....oned in section 28(1) of the Act of 1922 if his case falls within the terms of section 297(2)(g)....Similarly, the provision of section 271 of the Act of 1961 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g) of that Act. " Dr. Pal made a valiant attempt to distinguish the aforesaid decision of the Supreme Court so far as the application of section 271 of the 1961 Act was concerned. While he conceded that the decision of the Supreme Court must be taken as conclusive on the vires of section 297(2)(g), he submitted that the aforesaid decision of the Supreme Court proceeded on a consideration of section 271(1)(a) where reference is made to certain provisions of the Act of 1961, but....