AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1995 (1) TMI 25
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....(3) Whether, on the facts and in the circumstances of the case, the orders of the Income-tax Officer imposing penalties for the assessment years 1968-69 and 1969-70 were without jurisdiction ?" 1. The above three questions have been referred for the opinion of this court under section 256(1) of the Income-tax Act, 1961 ("the I.T. Act"), at the instance of the Commissioner of Income-tax, Vidarbha and Marathwada, Nagpur. 2. The assessee (deceased Sampatprasad Tiwari) declared his income from the business of supply of coal and sand and a share in a firm as under : Assessment year Date of return Amount of income declared Rs. 1967-68 25-8-1967 6,410 1968-69 2-1-1969 16,479 1969-70 3-7-1969 15,772 3. ....
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....mmissioner had issued a show-cause notice dated March 28, 1972, under section 274(2). For the assessment years 1968-69 and 1969-70 different show-cause notices were issued by the Income-tax Officer under section 274(2) after making the assessments vide order dated March 29, 1972. The Inspecting Assistant Commissioner imposed a penalty of Rs. 13,000 for the assessment year 1967-68 and the Income-tax Officer imposed penalties of Rs. 22,000 and Rs. 10,000, respectively for the assessment years 1968-69 and 1969-70. Being aggrieved by these orders of penalty, the assessee filed appeals before the Tribunal and the Appellate Assistant Commissioner. By a common order dated October 19, 1973, the Appellate Assistant Commissioner upheld the penalties ....
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....ncealed the Particulars of your income or furnished inaccurate particulars of such income." 7. The Tribunal, in all these cases, has gone merely on the use of the word "or" in between the two groups of words "concealed the particulars of your income" and "furnished inaccurate particulars of such income". It held that the penalties were founded upon ambiguous and vague show-cause notices and this vitiated the opportunity of hearing contemplated under section 274(2). 8. In our view, the Tribunal is right in holding that penalty for the assessment year 1967-68 was imposed without affording a reasonable opportunity of hearing to the assessee and is wrong in holding so for the penalties for the assessment years 1968-69 and 1969-70.....
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.... by itself invalidate the notice. The entire factual background would fall for consideration in the matter and no one aspect would be decisive. In this context, useful reference may be made to the following observation in the case of CIT v. Mithila Motor's (P.) Ltd. [1984] 149 ITR 751 (Patna) (headnote) : "Under section 274 of the Income-tax Act, 1961, all that is required is that the assessee should be given an opportunity to show cause. No statutory notice has been prescribed in this behalf. Hence, it is sufficient if the assessee was aware of the charges he had to meet and was given an opportunity of being heard. A mistake in the notice would not invalidate penalty proceedings." 10. Now, the Tribunal mainly relied upon the decision....
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....come since the stock at the closing of the year was undervalued. The penalty was quashed upon a view that the very basis for the penalty proceedings had disappeared when it was held that there was no suppression of income by the assessee. Thus, it would be seen that the ratio of that decision cannot be applied to this case. 12. The last decision relied upon is the case of N. N. Subramania Iyer v. Union of India [1974] 97 ITR 228 (Ker). The following passage from the said decision would demonstrate how entirely different the background of that case was and, therefore, the ratio of that decision also could not be applied (at page 231) : "The penalty notice, exhibit P-2, is illegal on the face of it. It is in a printed form, which comprehend....
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....ssioner. The vagueness and ambiguity in the notice had also prejudiced the right of reasonable opportunity of the assessee since he did not know what exact charges he had to face. In this background, quashing of the penalty proceedings for the assessment year 1967-68 seems to be fully justified. 14. This takes us to question No. 3 for recording an answer to which we see no difficulty whatsoever since the point stands concluded in the case of CIT v. Rizumal Pherumal [1988] 169 ITR 25 decided by this court, taking the view that the law prevailing on the date of initiation of the penalty proceedings and not on the date of filing of the original return, would govern the penalty proceedings. The case of Continental Commercial Corporation v. ITO....