Calcutta H.C : The notice dated March 19, 1981, under s. 274 r/w s. 271 of the IT Act, addressed to the writ petitioner has been challenged in the instant writ petition.

High Court Of Calcutta

Dr. Murari Mohan Kukherji vs. ITO

Section 271(1)(c)

Asst. Year 1978-79

P.K. Mukherjee, J.

C.R. No. 13242 of 1982

19th February, 1988 

Counsel Appeared

Sanjoy Bhattacharya & Mrs. Chandrima Bhattacharya, for the Petitioner : Nandalal Pal & Rupen Mitra, for the Respondents


The notice dated March 19, 1981, under s. 274 r/w s. 271 of the IT Act, addressed to the writ petitioner has been challenged in the instant writ petition. By the said notice, the ITO, 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 s. 271 of the IT Act shall not be imposed on him for ” concealing particulars of income ” or ” furnishing inaccurate particulars of such income ” to the IT authorities.

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 s. 271(1)(c)(iii) provides for actual quantification of income.

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 ITO or the AAC or the CIT (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 cl. (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.”

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 s. 271(1)(c) (iii), before the IT authorities.

Mr. Bhattacharya submitted that in the present case, the original assessment order for the asst. yr. 1978-79 of the writ petitioner was passed by Sri Kanailal De, ITO, ” B ” Ward, District-VIII, Calcutta, on March 31, 1981, under s. 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. Rs. Rs. Rs. Salary (Pension) 8,574 D. H. as in last year. 3,000 Profession Net profit as per a/cs. 73,531 Add: to receipt as per discussion above 20,000 understatement of consultation fees 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 375 attributable to personal use Car expenses estimated to be for personal 5,000 use Profession tax under s. 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 (TDS- Rs. 1,578). 6,957 Bank interest 3,869 A. D. refund 948 Other receipts 2,517 14,291 1,73,417 Less: Deduction under s. 80C 11,512 80G 1,203 80L 3,000 15,715 Total income 1,57,702 Proceedings under ss. 271(1)(c) and

273(c) has been initiated. Assessed under s. 143(3) as above. Charge interest under s. 217(1A). Issue D. N. and Challan. Allow credit for payment of Rs. 25,320 under s. 240 and Rs. 7,797 under s. 140A and TDS Rs. 1,578 “

On appeal from the said order, the CIT (Appeals) by order dated August 20, 1981, and after going through the materials placed before him and after bearing the ITO, observed that the ITO 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 assessee would get relief of Rs. 12,500 accordingly. In respect of the grounds Nos. 9 and 10 of the grounds of appeal, it was also found by the appellate authority that the ITO was not justified in disallowing Rs. 5,000 from car expenses and in disallowing 1/5th of the depreciation on car and the appellate authority had ordered accordingly. In conclusion, the appeal was allowed in part.

After placing the aforesaid portions from the appellate order from pages 69 to 78, from the writ petition, and drawing my attention to the impugned notice dated March 13, 1981, issued by the ITO, Mr. Bhattacharya submitted that, in any event, the said notice to show cause for penalty cannot be justified, as, by the appellate order, which has been passed on August 20, 1981, 5 months after issuance of the aforesaid impugned notice it cannot be supported in the eye of law, more so, when the original assessment order has no existence in the eye of law, as it appears that each item of adding back has been interfered with by the appellate authority as referred to hereinabove, in the appellate order.

In conclusion, Mr. Bhattacharya submitted that no penalty can be imposed on the basis of the provisions as no offence has been committed under s. 271(1)(c)(iii) and, as such, no notice can be issued in respect of the writ petitioner and the same should be quashed by issue of appropriate writ in the nature of certiorari.

Mr. Nandalal Pal, learned advocate appearing for the respondents, fairly conceded, as he found it would be useless to support such notice, which cannot be supported in view of the appellate order passed by the CIT (Appeals) dated October 20, 1981, which has replaced the original order of assessment practically altogether, and there is no quantification of amount.

In law, unless there was concealment of the particulars of income or of furnishing inaccurate particulars of such income, no person can be imposed with ” penalty ” in terms of the said section.

In the result, this writ petition is entitled to succeed. The rule is made absolute.

Let a writ in the nature of certiorari issue quashing the impugned notice dated March 13, 1981, issued by the ITO, ” B ” Ward, District-VIII, Calcutta, which is annexure ” M ” to the writ petition. This will not prevent the respondents from acting and proceeding in accordance with law, if they are so advised and if the law so permits.

[Citation : 171 ITR 515]

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