TaxTMI 
TaxTMI 
1971 (3) TMI 19
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....uld be said that no order was passed by the Income-tax Officer by his writin on the order sheet on October 3, 1963, and so the order passed by the Commissioner on March 25, 1964, under section 263(1) was null and void? " The questions arise out of proceedings for the assessment year 1962-63. The assessee is a registered firm. While taking assessment proceeding for the year 1961-62 the Income-tax Officer noticed some credit entries in the account of the assessee maintained in the books of M/s. Mirchand Nemichand, Guntur, which appear to relate to the years 1958-59 to 1962-63 and totalled Rs. 70,000. Out of this, he treated a sum of Rs. 12,000 as concealed income relating to the assessment year 1962-63 and made an assessment accordingly. I....
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....he view that the penal proceedings were dropped by the order of the Income-tax Officer dated October 3, 1963, and he was competent to revise that order under section 263(1). The note made by the Inspecting Assistant Commissioner, he said, was not an order under section 271 and it could not be said that he was revising it. The assessee appealed to the Income-tax Appellate Tribunal. The Tribunal held that when the Inspecting Assistant Commissioner wrote " no penalty " on September 25, 1963, he did not pass any order. Before he could pass an order, the Tribunal pointed out, he was bound to comply with all the formalities provided in the Act, that is, a date should have been fixed for hearing the assessee, thereafter an actual hearing on the....
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....other by the assessee. Of the two questions set out above, the first has been referred at the instance of the assessee and the second at the instance of the Commissioner. The Income-tax Officer was of the view that penalty proceedings should be taken under section 271(1)(c). He proposed to levy a penalty of Rs. 2,000. As the amount of the penalty exceeded the limit up to which he had jurisdiction, he referred the case to the Inspecting Assistant Commissioner for the purpose of imposing penalty. When he made this reference, he acted within the terms of section 274(2), which provides : " (2) Notwithstanding anything contained in clause (iii) of sub section (1) of section 271, if in a case falling under clause (c) of that sub-section, th....
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....the matter as not calling for the imposition of a penalty, and accordingly made that order. The Tribunal has been impressed by what it considers to be the formal requisites of a proceeding, before an order can be made. It points to the necessity or a date being fixed for hearing the assessee, an actual hearing, concluded by an order and communication of that order. We think it is open to the Inspecting Assistant Commissioner, and indeed desirable, that when a reference is made to him by the Income-tax Officer he should apply his mind to the question whether or not it is a case for penalty before notice is issued to the assessee requiring him to show cause against the imposition of a penalty. Where the Inspecting Assistant Commissioner comes....