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The Commissioner of Income Tax, Patiala. v. M/s. Shabzada Hosiery Mills Ludhiana - ITR-67-1990  RD-P&H 10792 (20 November 2006)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ITR No.67 of 1990
Date of decision:22.11.2006
The Commissioner of Income Tax, Patiala.
M/s. Shabzada Hosiery Mills Ludhiana
CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL
Present: Mr. SK Garg Narwana, Advocate, for the revenue.
Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 20.1.1983 in ITA No.68(ASR)/ 1980, in respect of assessment year 1968-69:- "1. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in permitting the assessee to take up a new ground of appeal regarding the jurisdiction of the Income Tax Officer to levy penalty when earlier the appellate Tribunal had remitted the case back to the Appellate Assistant Commissioner on the limited issue of quantum of penalty only?
2. Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in relying upon the Supreme Court judgment in Brij Mohan v.
CIT (1979) 120 ITR 1 and cancelling the penalty under section 271(1) ( c ) of the Income Tax Act, 1961, in view of the fact that jurisdiction to levy penalty is a procedural issue while the Supreme Court was interpreting substantive law applicable to penalty proceedings?
During the course of assessment for the assessment year 1968- 69, the Assessing Officer made addition of Rs.20,000/- as income from ITR No.67 of 1990 2
undisclosed sources and Rs.1500/- as interest. The same was confirmed by the appellate authority as well as by the Tribunal. The Assessing officer levied penalty equal to 150% of the amount added as undisclosed income which was cancelled by the appellate authority. On further appeal, the Tribunal remanded the matter for considering whether penalty was excessive. After remand, the CIT(A) held that the penalty was excessive and reduced the same to 100%. On appeal by the assessee, the Tribunal held that under section 274(2) of the Income Tax Act, 1961 (for short, 'the Act'), penalty beyond Rs.1000/- could be imposed only by Inspecting Assistant Commissioner and not by the Income Tax Officer. Reference was made to judgment of the Hon'ble Supreme Court in Brij Mohan's case (supra), wherein it was held that amendment from 1.4.1971 was not applicable and applicability of Section 274 of the Act was to be seen on the date of the filing of the return i.e. 12.8.1968.
We have heard learned counsel for the revenue and perused the findings recorded.
Learned counsel for the revenue has not been able to show any error in the finding of the Tribunal that under section 274(2) of the Act, Income Tax Officer was not competent to levy penalty beyond Rs.1000/- and that provision as stood on the date of the return i.e. 12.8.1968 was to be taken into account, as held by the Hon'ble Supreme Court in Brij Mohan's case (supra).
Accordingly, the questions referred are answered against the revenue and in favour of the assessee.
Reference is disposed of.
(Adarsh Kumar Goel)
November 22, 2006 (Rajesh Bindal)
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