Calcutta H.C : Was the Tribunal justified, legally or otherwise, in disposing of the appeal by ignoring the contention of the applicant that no proper opportunity of being heard in the matter of penalty proceedings was allowed by the IAC ?

Counsel AppearedDr. Debi Pal & Chatterjee, for the Assessee : Bagchi & Prasad, for the Revenue

SUHAS CHANDRA SEN J. :

Two questions of law have been referred to this Court under s. 256(2) of the IT Act, 1961 :

“(a) Was the Tribunal justified, legally or otherwise, in disposing of the appeal by ignoring the contention of the applicant that no proper opportunity of being heard in the matter of penalty proceedings was allowed by the IAC ?

(b) Is not the order of the Tribunal confirming the levy of penalty vitiated and/or liable to be set aside ?”

The assessment year involved is the asst. yr. 1968-69 for which the previous year ended on October 31, 1967. The facts of the case found by the Tribunal have been stated as under :

The assessee filed his return on June 3, 1968, declaring a total income of Rs. 23,576. During the course of assessment proceedings, the ITO enquired of the assessee the nature and source of Rs. 25,000 being a loan alleged to have been taken by the assessee in the name of Eastern Industries Corporation. The ITO treated Rs. 25,000 as the assessee’s income from business in his order of March 14, 1972, the relevant portion of which reads as under : “Sri N. C. Khasnabia, Advocate, appears and submits that it would not be possible for them to satisfy the cash credit amounting to Rs. 25,000 in the name of Eastern Industries Corporation and hence he volunteers on behalf of the assessee that the said amount of Rs. 25,000 be treated as the assessee’s income from business. As regards other cash credits …. (Sd.) ITO Agreed. (Sd.) Khasnabia.”

The ITO framed the assessment on a total income of Rs. 76,718. Simultaneously, he initiated penalty proceedings under section 271(1)(c) of the Act and referred the matter to the Inspecting Asstt. CIT as the minimum penalty imposable under that section exceeded Rs. 1,000. The IAC, after noticing that the aforesaid addition was upheld by the AAC and that no further appeal was preferred by the assessee against the

[Citation : 179 ITR 111]