Commissioner Of Income-Tax vs Maharaj Krishan
2000 Latest Caselaw 725 Del

JUDGMENT

1. Accepting a prayer under Section 256(1) of the Income-tax Act, 1961 (in short the "Act"), made by the Revenue, the Income-tax Appellate Tribunal (in short the "Tribunal"), has referred the following question for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty levied upon the assessee under Section 271(1)(a) of the Act ?"

2. The factual position as borne out from the statement of case is as follows:

Mr. Maharaj Krishan (hereinafter referred to as the "assessee") had filed his return of income for the assessment year 1958-59. The same was dealt with and an order of assessment was passed on March 28, 1963. As there was delay in filing the return, the Income-tax Officer directed, inter alia, in the assessment order as follows :

"Issue demand notice and challan. Allow L. I. P. Rebate on Rs. 1,069 and on tax paid by R. E. Also issue penalty notice for late filing of the return." (underlined for emphasis)

3. In response to the notice served, the assessee raised certain points and stated that there was reasonable cause for not filing the return in time. Considering the submissions, penalty of Rs. 11,167 was imposed. In the appeal filed before the Appellate Assistant Commissioner (in short "the AAC") the only point raised by the assessee was that there was no valid or proper notice before penalty was imposed. It was submitted that the proceedings were initiated for concealment of income and not for delay in filing of the return. The Appellate Assistant Commissioner did not accept the contention and on verification of the original records and a copy of the notice which was served on the assessee, came to the conclusion that the proceeding's were validly initiated. It was noticed that though in the assessment order it was stated that the penalty notice for late filing of the return was to be issued and in fact the original notice was issued but unnecessary portions were not deleted. Nevertheless, another notice was also issued on December 17, 1964. The first notice was dated March 28, 1963. Penalty levied was affirmed. The matter was carried in appeal before the Tribunal by the assessee. The Tribunal came to hold that the specific charge which was required to be made against the assessee was not spelt out from the notice and, therefore, there was no valid service of notice. On being moved under Section 256(1), the above stated reference has been made.

4. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessee, who in the meantime has expired and his legal heir, Smt. Demayanti Rani Chadha, has been substituted. We find from the order of the Appellate Assistant Commissioner that he had examined the original record and compared the copy of the notice on record with copy of the notice that was served on the assessee and produced by him. His conclusions were as follows :

"The notice read with the assessment order should have made it amply clear to the appellant the year for which penalty action was contemplated and for what offence he was being proceeded against. The office copy of the notice is very clear, in that the notice has been issued for failure to file the return. But due to an oversight the portion which deals with the concealment of the particulars of income, etc., was not struck off. On verification of the copy of the notice given to the appellant, it was found that the position is quite the same. The notice in question, therefore, was not invalid. However, for some reason, instead of clarifying doubts raised in the appellant's letter dated April 18, 1963, the Income-tax Officer chose to issue another notice dated December 17, 1964. From this, learned counsel wants me to draw the inference that the fresh issue of notice suggested to the Income-tax Officer himself that he was satisfied that the notice dated March 28, 1963, issued earlier by him was vague and, therefore, invalid. He proceeded to contend that the second notice was obviously issued after completion of the assessment proceedings and, therefore, invalidly initiated. The answer to this argument is that a mere issue of a second notice does not vitiate the first one, if the first one is otherwise valid. As held by me earlier, there is no fatal defect in the first notice and the second one was, therefore, superfluous. In these circumstances, I am inclined to hold that the proceedings were validly initiated,"

5. The Tribunal observed that the Revenue authorities acted upon the first penalty notice served on the assessee. The said copy of the notice was shown to the Tribunal at the time of hearing. Unfortunately, the original records which were referred to by the Appellate Assistant Commissioner were not looked into by the Tribunal. With reference to the notice produced by the assessee, the Tribunal came to the conclusion that a proper charge has not been made in the notice for late submission of the return by the assessee and, therefore, validity of the proceedings were open to challenge.

6. As has been observed by the Appellate Assistant Commissioner and as also borne out from the copy of the assessment order, direction was given by the Income-tax Officer for initiation of proceedings for delay in filing of the return, About that there is no dispute. The Appellate Assistant Commissioner with reference to the original records found that the unnecessary portions in the notice were not deleted. That did not invalidate the notice which was issued. The mere fact that subsequently another notice was issued cannot take away the validity of the first notice, particularly, when there was a clear direction in the order of assessment for initiation of proceeding's under Section 271(1)(a) for delay in filing of the return. That being the position, the Tribunal was not justified in holding that the penalty was not validly levied, and was not justified in cancelling the penalty. Our answer to the question is in the negative and in favour of the Revenue.

7. Reference stands disposed of accordingly.