TaxTMI 
TaxTMI 
1977 (8) TMI 42
X X X X Extracts X X X X
X X X X Extracts X X X X
....922 ? 2. Whether, on the facts and in the circumstances of the case, the penalty proceedings had validly been initiated in the present case ?" Narayan Hosiery Private Ltd., the assessee-company, was directed by a notice dated June 8, 1960, issued under section 22(2) of the Indian Income-tax Act, 1922, by the Income-tax Officer, E-Ward, Commercial District I, Calcutta, to file a return. That officer at that time had jurisdiction over the assessee-company. The notice was served upon the assessee-company on June 15, 1960. No return of income was filed by the assessee-company within the time permitted by the notice. In the meantime, the case of the assessee-company was transferred by the Central Board of Revenue to the Additional Income-t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....up by the last Income-tax Officer for completion. The other objections were also rejected by him, but it is unnecessary to refer to that part of the order as it does not survive. In an appeal by the assessee, the Appellate Assistant Commissioner allowed the appeal on a preliminary ground and set aside the penalty order holding that the said order was barred by time. He took the view that the notice issued under section 28(3) of the Indian Income-tax Act, 1922, on October 12, 1962, was illegal and void as the assessment was not completed before April 1, 1962. According to him, the penalty proceedings could have only been initiated under the provisions of the Income-tax Act, 1961, which was then in force. He further held that, so far as th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the revenue that the penalty order passed on October 28, 1964, was within the period of 2 years from the completion of the assessment on October 30, 1962, and was not, therefore, barred by time under section 275 of the Income-tax Act, 1961. It was also urged on behalf of the revenue that the penalty proceedings had already been initiated on October 12, 1962, long before completion of the assessment. On the other hand, on behalf of the assessee-company, it was urged that there was no default as is dealt with under section 271(1)(a) of the Income-tax Act, 1961, as there was no non-compliance with the relevant provisions of the said Act. It was also urged on behalf of the assessee-company that the only valid notice, if at all it was a valid n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax [1963] 50 ITR 761. According to the Tribunal, the decision of the Madras High Court was directly in point and followed the same. The Tribunal then considered the question as to whether the notice issued under section 28(3) of the Indian Income-tax Act, 1922, on October 12, 1962, could be said to give validity to the proceedings ending in the levy of penalty. Following the decision of the Supreme Court in L. Hazari Mal Kuthiala v. Income-tax Officer [1961] 41 ITR 12, the Tribunal held that the exercise of a power would be referable to a jurisdiction which conferred validity upon it and not to a jurisdiction under which it could be nugatory. The Tribunal took the view that the penalty proceedings were validly initiated before the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of April, 1962, may be initiated and any such penalty may be imposed under the Income-tax Act, 1961. Section 271(1) deals with initiation of proceedings, inter alia, for failure to furnish returns within the time. Referring to these two sections the Supreme Court in Jain Brothers' case [1970] 77 ITR 107 pointed out that both section 271(1) and section 297(2)(g) have to be read together and in harmony and so read the only conclusion possible is that for the imposition of a penalty in respect of any assessment for the year ending on March 31, 1962, or any earlier year which is completed after the first day of April, 1962, the proceedings have to be initiated and the penalty imposed in accordance with the provisions of section 271 of the Inco....