COMMISSIONER OF INCOME TAX vs. MRS.SHUSHILABEN PREMJI

ITR/79/1983HC GujaratGJHC24011552198327 January 1997Author: HONOURABLE MR. JUSTICE R.K.ABICHANDANI,HONOURABLE MR. JUSTICE R.BALIA7 pages
AI SummaryPartly Allowed

What were the facts?

The Income Tax Appellate Tribunal (ITAT) referred two questions of law to the High Court concerning penalties levied by the Income Tax Officer (ITO) under Section 271(1)(c) for Assessment Years 1969-70, 1970-71, 1972-73, and 1973-74. The ITO had initially imposed penalties totaling Rs. 3,25,000. The assessee challenged these before the Commissioner of Income Tax (CIT) under Section 273A(4), who reduced the penalties to Rs. 90,000. The ITAT found that the ITO lacked jurisdiction to levy the penalty, and this jurisdiction was vested with the Inspecting Assistant Commissioner (IAC). The ITAT also held that the order of the CIT under Section 273A(4) did not cause the ITO's order to merge, making the ITAT competent to set aside the ITO's penalty order.

What did the High Court hold?

The High Court held that the ITAT was not right in holding that the ITO had no jurisdiction to levy the penalty under Section 271(1)(c). The Court reasoned that the penalty proceedings were initiated on May 17, 1978, and September 7, 1976, respectively. By April 1, 1976, sub-section (2) of Section 274 was deleted, which previously mandated references to the IAC for penalties exceeding Rs. 25,000. Therefore, the ITO was empowered to impose penalties. The Court also noted that the ITO obtained the requisite previous approval of the IACJR before passing the penalty orders, as per the proviso to Section 271(1)(c)(iii) which required approval if the concealed income exceeded Rs. 25,000. Thus, the ITO acted within his lawful jurisdiction. Question 1 was answered in the negative, in favour of the Revenue. Regarding Question 2, the Court held that the doctrine of merger was not attracted because the CIT's order under Section 273A(4) was not an appellate order but a reduction of penalty. However, the reduced penalty amount imposed by the CIT would substitute the original ITO's penalty. The reference was disposed of accordingly.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the finding of the Appellate Tribunal that the ITO had no jurisdiction to levy the penalty under Section 271(1)(c) and the jurisdiction was vested with the IAC, is correct in law? - Assessee's contention (as per ITAT's finding): The ITO lacked jurisdiction to levy the penalty under Section 271(1)(c) because, at the time of filing the original returns, only the IAC was empowered to impose such penalties. The jurisdiction should be examined based on the powers existing at the time of issuing notices under Section 271(1)(c). - Revenue's contention (as per ITAT's finding): The ITO had jurisdiction to impose the penalty because the law changed effective April 1, 1976, by deleting sub-section (2) of Section 274, empowering the ITO to impose penalties exceeding Rs. 1,000. The relevant date for jurisdiction is when the penalty proceedings were initiated. 2. Whether the ITAT has been right in law in not accepting the contention of the Revenue that by virtue of the order of the CIT under Section 273A(4), the order of the ITO had merged and the ITAT was therefore not competent to set aside the order of the ITO in levying the penalty? - Revenue's contention: The order of the CIT under Section 273A(4) caused the ITO's order to merge, divesting the ITAT of its competence to review the ITO's penalty order. - Assessee's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 273A(4),Section 274(2),Section 147(a)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 79 of 1983

For Approval and Signature:

Hon'ble MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE R.BALIA. ============================================================

1.

Whether Reporters of Local Papers may be allowed to see the judgment ?

2.

To be referred to the Reporter or not ?

3.

Whether their Lordships wish to see the fair copy of judgment?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

========================================================= -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus MRS.SHUSHILABEN PREMJI -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner SERVED for Respondent No. 1

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 271(1)(c)

All 24,918 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →