LexD.M. MANASVI versus C. I. T., GUJARAT II, AHMEDABAD
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A NAGESHWARA v. MAHARASHTRA (Dua, J.) D. M. MANASVI v. C. I. T., GUJARAT II, AHMEDABAD September 19, 1972 389- 11 [K. $. HEGDE, P. ]AGANMOHAN REDDY AND H. R. KllANNA, JJ.J ( D E F G II JnconH' TCEx Act, 196 I-Section 271 ( 1) (c)-Scopc of-Satisfactio11 r(·:.:urding 11u1fte'rs iii els. (a) to (c) pre<.'edes the issue of notice-Notice 11t'1'rl nnt he h.:rued in the ,·o•irse of assess111cnr proceedincs-N1J notice f 011te1nplated he/ore arri~·ing at the satisfacrion--Provision for reference to Inspecting Assistant Conunis.sioner does not 1nean proceedings cannot be initiated by /nro111e Tax Officer. \Vhat i" contcmplutcd by clause l1) of section 271, Income Tax: Act. l:J61, is that 1hc Income Ti.ix Officer or the Appellate Assistant C-ommis- ... ioncr shoul<l h:i.vc been s:.tlisfied in the course of proceedings U"lder the ACl regarding n1attcrs mentioned in the clauses of that sub-section. It is not howcvl!r e'>scntial that notice to the pcrs0!1 piocceded against should have also been i.:;~~uc<l during the course of the ussessn1r:r1t proceedings. S:ilisfac~ion. in the very narui:c of things, precedes the issue of notice and it \\"Ould not be correct to equate the satisfaction of the Income 'fax Officer or Appellate Assistant Commissioner with the actual issue of notice. ·rhc issue of notice, indeed, is a conseque;rl'CC of the f.atisf:action of the Income T<lx ·Officer .or the.Appellate A'Ssistant Commi~sioner and it \vou1d h~ sufficient complianc.'p with the provisions of the statute if the Income i·ax Officer or the Appellate AssiStant_Comptissioncr is ~atisficd about the matters referred to in clauses (a) to (c) qf sub·scction (!)·Of section 271 duri.ng the course of proceedings under· the Act, even though notice In the perso11 ·procceded against in pur~Uance of that satisfacrion is issued ~l1bsequcnt to the muking of the assessment ord.zrs would not shOY.' that there was no s:1tisfaclion of the Income Tax Officer during the a1\sessmcnt rruceedings, that the assessee had concealed the particulars of his income Pf had furnished incorrect particulars b[ such lncome. f393E] Co111111i\'.\'io11cr of lnco111e Tax,..:..Madra.r and Anr, v. S. V. A11gidi Climiar, (1962( 44 I.T.R. 739, referred to. The fact th"t the Incomll...J°ax Officer has to refer the case to the I nspcling Assist:int Commbsioner if the minin1un1 imposable penalty ex· c~cds the sun1 of rupees one thousand in n case "falling under clause ( c) l'I .'i;ub-scction (I) of section 271. would not sho\v !hat the proccct..lings in -uch a ca'c cannot be initiated by the Income Tax Officor. f394F) J t is not necessary that .the Income Tax. Officer. before feeling satisfied r ... ·gnrding the ncc.~ssity of initiating proceedings for imposition of penalty anU before is.,uir.g C'0!!1'Sequential notice should have i· sued another notice 10 the a\scssec and held a preliminary enquiry reg::irding the necessity of init:ating proceeding.;;. Such a course \.\'Ould result in mere duplication of the procedure without anv advnntage to the. parties. The final conclu- 'iC'n on the point ns to whether thi:: requir..:ments of clauses (a). (b) and tc) of s. 27 l have ix:~n satisfied \\·ould be reached only after the asses.sec ha!' been heard or has been given a reasonable opportunity' of being heard. iJ95E, BJ CIVIL APPELLA";'E JURISDICTION: Civil Appeals Nos. 1447 to 1450 of 1969. 390 SUPREME COURT REPORTS [1973] 2 s.c.R. Appeals by special leave from the judgment and order dated August 30, 1968 of the Gujarat High Court at Ahmcdabad in Income-tax Reference No. 6 of 1968. M. C. Chag/a and I. N. Shroff, for the appellant. N. D. Karkhanis, R-7 N. Sachthey and S. P. Nayar, for the. res- pondent. The Judgment- of the Court was delivered by KHANNA, J.-This judgment would dispose of four civil appeals Nos. 1447 to 1450 of 1969 which have beeu filed by the assesse-: by special leave against the judgment of Gujarat High Court whereby that court answered the following two ques- tions in a reference under section 256(1) of the Income Tait Act, 1961 (hereinafter referred to tis the Act) in the affinna- tive and in favour of 1he department : "(1) Whether on the facts and in the circumstances of the case, the proceedings for the imposition of penal- ty were properly commenced in the course of any pro- ceedings under 1he Act as required by section 271 of the Income Tax Ac.t, 1961 for the assessment years 1959-60
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