Andhra Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of the AAC, cancelling the levy of penalty of Rs. 3,021 by the ITO under s. 271 (1) (c) of the IT Act, on the basis of a defective show-cause notice issued by the ITO ?

High Court Of Andhra Pradesh

Srinivasa Pitti & Sons vs. CIT

Section 271(1)(c)

Asst. Year 1969-70

G. Ramanujulu Naidu & Y.V. Anjanevulu, JJ.

Refd. Case No. 141 of 1983

24th February, 1988

Counsel Appeared

A. Satyanarayana, for the Assessee : M. Suryanarayana Murthy, for the Revenue

Y.V. ANJANEYULU, J.:

The question referred for consideration, on a direction from this Court under s. 256(2) of the IT Act, 1961, is as under:

” 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order of the AAC, cancelling the levy of penalty of Rs. 3,021 by the ITO under s. 271 (1) (c) of the IT Act, on the basis of a defective show-cause notice issued by the ITO ? “

The matter relates to the asst. yr. 1969-70. Pursuant to a notice dated March 12, 1974, issued to the assessee, a penalty of Rs. 3,021 was levied under s. 271(1)(c) of the IT Act. The assessee challenged the order levying the penalty in an appeal before the AAC on two grounds. Firstly, he urged that the show- cause notice issued was defective and, secondly, no penalty was leviable on merits. The AAC accepted the former contention and allowed the appeal.

The Revenue filed an appeal before the Tribunal. The Tribunal accepted the Revenue’s contention that there was no defect in the showcause notice. Consequently, it directed the AAC to consider the question regarding merits. Aggrieved by the aforesaid order, the matter has been carried to this Court by the assessee. Looking at the notice under s. 274 dated March 12, 1974, we are inclined to accept the assessee’s contention that the notice was defective, because the relevant portion in the notice concerning the levy of penalty for concealment of income and giving inadequate particulars of income was struck off. Fortunately, for the Revenue, however, the assessee understood the notice as one for the levy of penalty under s. 271(1)(c) of the IT Act. Accordingly, he sent a reply. The assessee’s reply was considered and penalty was levied. We, therefore, think that no prejudice is caused to the assessee by the defective nature of the notice as he has had full opportunity before the ITO to set out his defence against the levy of penalty under s. 271(1)(c) of the Act. In that view, we consider that the order of the ITO levying penalty under s. 271 (1)(c) of the Act does not suffer from want of jurisdiction. Support for this view can be found in a decision of this Court in CIT vs. Chandulal (1985) 48 CTR (AP) 23 : (1985) 152 ITR 238 (AP).

4. Mr. A. Satyanarayana, learned counsel for the assessee, represents to this Court that the matter relates to 1969-70 and as nearly two decades have since elapsed, the question regarding the merits remained unresolved causing considerable hardship to the assessee. It was pointed out that although there was a direction by the Tribunal to the AAC to decide the case on merits, the matter was not taken up by the learned AAC and in the meantime some complications had set in. We cannot over emphasise the need on the part of the appellate authorities to deal with all the contentions urged at the time of disposal of the appeal. The practice of taking up one amongst several contentions and allowing the appeal on that ground would result in piecemeal disposal of the appeal causing considerable time-lag and consequent hardship on account of the superior appellate authorities taking contrary views in the matter. In the interests of all concerned, appellate authorities like the AAC, CIT(A) and the Tribunal, should address themselves to all the contentions raised before them and dispose of them so that there is a decision on all the points urged. When the matter is processed, no further time will be lost by the necessity to remand the matter on matters not considered. We hope the learned AAC will take up the matter without further delay and record his views on the question on merits. The reference is answered accordingly.

No costs.

[Citation : 173 ITR 306]

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