Back
1988 Supreme(Cal) 48
High Court Of Calcutta
P. K. Mukherjee
MURARI MOHAN MUKHERJI - Appellant
Versus
INCOME-TAX OFFICER, B-WARD - Respondent
C. R. 13242 Of 1982
Decided On : 02/19/1988
Chandrima Bhattacharya, NANDALAL PAL, RUPEN MITRA, SANJAY BHATTACHARYA
A notice for penalty under Section 271(1)(c)(iii) of the Income-tax Act cannot be issued unless there is a specific charge of concealment of particulars of income or furnishing inaccurate particulars of income, and the amount of tax sought to be evaded is quantified.
Headnote:
INCOME TAX - Section 271(1)(c)(iii) - Notice for penalty - Concealment of particulars of income - Quantification of income - Appellate order replacing original assessment order - Notice for penalty cannot be sustained.
Fact of the Case:
The Income-tax Officer issued a notice to the petitioner under Section 271(1)(c)(iii) of the Income-tax Act, directing him to show cause why a penalty should not be imposed for concealing particulars of income or furnishing inaccurate particulars of income. The petitioner challenged the notice, arguing that it was invalid because there was no specific charge of non-supply of material in terms of Section 271(1)(c)(iii) before the income-tax authorities.
Finding of the Court:
The court found that the original assessment order passed by the Income-tax Officer had been replaced by an appellate order passed by the Commissioner of Income-tax (Appeals), which had interfered with each item of adding back made by the Income-tax Officer. The appellate order had also found that the Income-tax Officer had erred in disallowing certain expenses claimed by the petitioner.
Issues: Whether the notice for penalty issued under Section 271(1)(c)(iii) of the Income-tax Act was valid.
Ratio Decidendi: The court held that the notice for penalty was invalid because there was no specific charge of concealment of particulars of income or furnishing inaccurate particulars of income, as required by Section 271(1)(c)(iii) of the Income-tax Act. The court further held that the appellate order had replaced the original assessment order and there was no quantification of amount.
Final Decision: The court quashed the notice for penalty.
( 1 ) THE notice dated March 19, 1981, under Section 274 read with Section 271 of the Income-tax Act, addressed to the writ petitioner has been challenged in the instant writ petition. By the said notice, the Income-tax Officer, District-VIII, Calcutta, directed Dr. Murari Mohan Mukherji of 12/1/8, Manohar Pukur Road, Calcutta-26, to show cause by April 30, 1981, why an order imposing "penalty" on him under Section 271 of the Income-tax Act shall not be imposed on him for "concealing particulars of income" or "furnishing inaccurate particulars of such income " to the income-tax authorities.
( 2 ) AFTER placing the aforesaid notice, which is annexure "m" to the present writ petition, Mr. Sanjoy Bhattacharya, learned advocate appearing for the writ petitioner, submitted that the aforesaid notice suffers from an inherent infirmity, as Section 271 (1) (c) (iii) provides for actual quantification of income.
( 3 ) IN order to understand the argument of Mr. Bhattacharya, it will be convenient for me to set out the said provision hereinbelow :"271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person - -. . . . . . (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- -. . . (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. "
( 4 ) FROM the above provisions, it has been made abundantly clear that before a penalty proceeding can be initiated, there must be a specific charge of non-supply of material in terms of Section 271 (1) (c) (iii), before the income-tax authorities.
( 5 ) MR. Bhattacharya submitted that in the present case, the original assessment order for the assessment year 1978-79 of the writ petitioner was passed by Sri Kanailal De, Income-tax Officer, "b" Ward, District-VIII, Calcutta, on March 31, 1981, under Section 143 (3) of the Act, on the basis of the return furnished on July 31, 1978, in respect of the total income of Rs. 83,580 which was as follows ; total income
is computed as under--
Rs.
1. Salary (Pension) 8,574
2. D. H. as in last year. 3,000
3. Profession : Net profit as per a/cs. 73,531
Add : to receipt as per discussion above understatement of consultation fees 20,000
Undisclosed operation charges 25,000
Understatement of operation charges 20,000
65,000
1,38,531
Add: expenses disallowed :
1/5th of depreciation on car estimated as attributable to personal use 375
Car expenses estimated to be for personal use 5,000
Profession tax under section 40 (a) (ii) 200
Telephone for personal use 400
Payment to Calcutta Club being personal 2,995
9,021
1,47,552
Other sources dividend 6,957 (TDS--Rs. 1,578 ).
Bank interest 3,869
948
Other 'receipts 2,517
A. D. refund
14,291
1,73,417
Less :
Deduction under section
80c
11,512
80g
1,203
80l
3,000
15,715
Total income
1,57,702
( 6 ) ON appeal from the said order, the Commissioner of Income-tax (Appeals) by order dated August 20, 1981, and after going through the materials placed before him and after hearing the Income-tax Officer, observed that the Income-tax Officer had erred in taking it that the assessee attended to his chambers for consultation 4 days in a week, whereas he used to attend only 3 days and estimated adding back of Rs. 25,000. The appellate authority was also of the view that if the addition is restricted to Rs. 7,500, it would meet the ends of justice in all respects and the asses-see would get relief of Rs. 12,500 accordingly. In resp
