INCOME TAX OFFICER v. FAQUIR CHAND GURCHARAN SINGH
[Citation -1984-LL-0323-4]

Citation 1984-LL-0323-4
Appellant Name INCOME TAX OFFICER
Respondent Name FAQUIR CHAND GURCHARAN SINGH
Court ITAT
Relevant Act Income-tax
Date of Order 23/03/1984
Assessment Year 1975-76
Judgment View Judgment
Keyword Tags initiation of penalty proceedings • concealed income
Bot Summary: In the course of assessment proceedings, on 3rd Oct., 1977, the ITO issued a notice which was served on the counsel for the assessee demanding of him to explain the cash credits and also to shown cause for levy of penalty under s. 271(1)(c). Counsel for t h e assessee Mr. D.K. Gupta, on the other hand, relied on the order of the CIT(A) and submitted that no penalty proceedings were initiated in the course of assessment and the notice alleged to have been served on the counsel for the assessee dt. 3rd Oct., 1977 for 31st Oct., 1977 was not for penalty alone but also for explanation for the cash credits and the same could not result into the ITO's satisfaction on that date regarding initiation of penalty. After taking into consideration the rival submissions and looking into record, we find that there is no mention regarding initiation of penalty proceedings under s 271(1)(c) and as on 3rd Oct., 1977 the assessee's counsel was required to explain the cash credits, he was also given a notice for concealment of the same which was pre-mature and could not be termed as initiation of penalty proceedings as the assessment was framed subsequently on 27th Feb., 1978 and in the said assessment order there was no mention regarding initiation of penalty for concealment under s. 271(1)(c). Under these circumstances, it was clear that no opportunity had been allowed by the ITO to the assessee as envisaged under s. 274(1) and the CIT(A) on that basis was justified in cancelling the said penalty. Is a case which pertains to s. 28(1)(a) proceedings under the old Act in which there was no controversy regarding limitation for levy of penalty. Departmental representative is accepted regarding granting an opportunity to the ITO for making up the irregularity of non-grant of opportunity, it will serve no purpose whatsoever because the matter has become 'time-barred' and as above said, instant is a case where penalty proceedings were not initiated in the course of assessment as there is no mention to that effect in the assessment order and earlier notice was given at a time when the ITO needed or lacked the satisfaction that the two amounts were on account of concealed income as vide the very same notice he had asked the ld.


sum and substance of all grounds raised by Revenue in this appeal, is to dispute action of CIT(A) who cancelled penalty of Rs. 34,100 levied by ITO under s. 271(1)(c) of IT Act, 1961. In order to appreciate issue, it will be better in case facts pertaining to issue are stated briefly. assessment year involved is 1975-76. ITO in course of assessment proceedings had added two cash credits of Rs. 19,100 and Rs. 15,000 in names of Ramji Dass and Krishna Devi, for which even confirmatory letters were not produced. In course of assessment proceedings, on 3rd Oct., 1977, ITO issued notice which was served on counsel for assessee demanding of him to explain cash credits and also to shown cause for levy of penalty under s. 271(1)(c). However, assessment was finalised on 27th Feb., 1978 and in said assessment order no mention was made regarding penalty for concealment under s. 271(1)(c). show cause notice dt. 21st March, 1980 was, however, issued in which date of hearing fixed for 28th March, 1980, served on assessee, by affixture, on 28th March, 1980 itself. ITO levied penalty in equal amount of two credits in sum of Rs. 34,100. When same was disputed by assessee before CIT(A), he cancelled same on basis of observations that no opportunity had been allowed by ITO to assessee as envisaged under s. 274(1). ld. departmental representative Mr. M.P. Singh while disputing said action of CIT(A) vehemently argued that grant of opportunity is procedural matter and in that regard he relied on cases of Guduthur Bros. vs. ITO (1960) 40 ITR 298 (SC), Ram Gopal Neotia vs. ITO (1982) 1 ITD 160 (Cal) (SB) and Addl. CIT vs. Boina Surenna (1980) 124 ITR 328 (AP). ld. counsel for t h e assessee Mr. D.K. Gupta, on other hand, relied on order of CIT(A) and submitted that no penalty proceedings were initiated in course of assessment and notice alleged to have been served on counsel for assessee dt. 3rd Oct., 1977 for 31st Oct., 1977 was not for penalty alone but also for explanation for cash credits and same could not result into ITO's satisfaction on that date regarding initiation of penalty. He relied on case of D.M. Manasvi vs. CIT 1972 CTR (SC) 437: (1972) 86 ITR 577 (SC). After taking into consideration rival submissions and looking into record, we find that there is no mention regarding initiation of penalty proceedings under s 271(1)(c) and as on 3rd Oct., 1977 assessee's counsel was required to explain cash credits, he was also given notice for concealment of same which was pre-mature and could not be termed as initiation of penalty proceedings as assessment was framed subsequently on 27th Feb., 1978 and in said assessment order there was no mention regarding initiation of penalty for concealment under s. 271(1)(c). However, there is no controversy about fact show cause notice subsequently issued was dt. 21st March, 1980 which was served on assessee by affixture on 28th March, 1980 itself, as per which assessee was required to show cause on 28th March, 1980 itself, which was date of hearing. Under these circumstances, it was clear that no opportunity had been allowed by ITO to assessee as envisaged under s. 274(1) and CIT(A) on that basis was justified in cancelling said penalty. Reliance of ld. departmental representative on cases, mentioned above, is misplaced due to distinction in facts. Guduthur Bros. (supra) is case which pertains to s. 28(1)(a) proceedings under old Act in which there was no controversy regarding limitation for levy of penalty. Similar is case of Ram Gopal Neotia (supra) on which reliance is placed by ld. departmental representative which too is misplaced due to distinction in facts of instant case. Even Boina Surenna (supra) case is different. In instant case, even if for sake of argument, contention of ld. departmental representative is accepted regarding granting opportunity to ITO for making up irregularity of non-grant of opportunity, it will serve no purpose whatsoever because matter has become 'time-barred' and as above said, instant is case where penalty proceedings were not initiated in course of assessment as there is no mention to that effect in assessment order and earlier notice was given at time when ITO needed or lacked satisfaction that two amounts were on account of concealed income as vide very same notice he had asked ld. counsel for assessee to give proof about genuineness o f same. In light of above discussion and for reasons given by CIT(A) in his order, his action is confirmed. In result, revenue's appeal is dismissed. *** INCOME TAX OFFICER v. FAQUIR CHAND GURCHARAN SINGH
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