JUDGMENT
J.S. Verma, C.J.
1. This is an application under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), at the instance of the Revenue to answer the following questions of law, viz. :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expression ‘in the course of any proceedings’ occurring in Section 271(1) does not refer to the penalty appeal filed before the Appellate Assistant Commissioner against the penalty order of the Income-tax Officer ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner cannot initiate penalty proceedings under Clause (b) of Section 251(1) of the Income-tax Act, 1961, in the course of appeal proceedings, filed against a penalty order, passed under Section 271(1)(a) by the Income-tax Officer ?”
2. The relevant assessment years are 1974-75 and 1975-76. The Income-tax Officer imposed penalties under Section 271(1)(a) of the Act on the assessee of different amounts in respect of the two assessment years. The assessee preferred appeals to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner allowed the appeal, but after notice to the assessee, came to the conclusion that the assessee had failed to furnish the returns in time without any reasonable cause. Accordingly, the Appellate Assistant Commissioner himself levied penalties under Section 271(1)(a) of the Act on the assessee in respect of these two assessment years. The assessee preferred further appeals to the Income-tax Appellate Tribunal (for short “the Tribunal”). The Tribunal has taken the view that the Appellate Assistant Commissioner was not competent, while disposing of the assessee’s appeal against imposition of penalty, to himself impose penalty on the assessee under Section 271(1)(a) of the Act. In the opinion of the Tribunal, the expression “in the course of any proceedings under this Act” occurring in Sub-section (1) of Section 271 does not include an appeal to the Appellate Assistant Commissioner filed by the assessee against imposition of penalty by the Income-tax Officer. The question before us is whether this view of the Tribunal is correct.
3. The expression “in the course of any proceedings under this Act” is wide enough to include even an appeal to the Appellate Assistant Commissioner against imposition of penalty by the Income-tax Officer, since such an appeal is expressly provided under the Act, This being the situation, unless there are compelling reasons to be found elsewhere, there is no occasion to hold that this wide expression excludes from within its ambit an appeal filed by the assessee against imposition of penalty.
4. The Tribunal has also mentioned that upholding the competence of the Appellate Assistant Commissioner to impose penalty in such proceedings would amount to depriving the assessee of one appeal which he would have otherwise, if the penalty is imposed initially by the Income-tax Officer. The answer to that, obviously, is in Sub-section (1) of Section 271 itself, which empowers not only the Income-tax Officer, but also the Appellate Assistant Commissioner to initiate penalty proceedings as provided therein. Reference has also been made to Section 251(1)(b) of the Act, which deals with the powers of the Appellate Assistant Commissioner while disposing of an appeal against an order imposing penalty. It suggests that the course of initiating penalty proceedings while disposing of an appeal is not contemplated by this provision.
5. In the Indian Income-tax Act, 1922, the provision corresponding to Section 271(1)(a) of the 1961 Act was Section 28(1)(a) of the 1922 Act and the provision corresponding to Section 251(1) of the 1961 Act was Section 31(3) of the 1922 Act. In Haji Ghulam Hussain v. CIT [1953] 23 ITR 309, the Division Bench of the Allahabad High Court considered the same question and after construing the relevant provisions, came to the following conclusion (p. 313) :
“In the case before us it cannot be doubted that an appeal did lie to the Appellate Assistant Commissioner against the order of the Income-tax Officer passed under Section 28(1)(c). Section 30 expressly provides for appeals, inter, alia, against the order passed under Section 28. There was, therefore, a competent proceeding pending before the Appellate Assistant Commissioner, Section 28(1) of the Indian Income-tax Act provides that If the Appellate Assistant Commissioner has before him any proceedings under the Act, then if he is satisfied that it is necessary to pass any orders under the various clauses mentioned in that section, he has authority to do so. As we have already said, there can be no doubt, and it is not disputed by learned counsel, that, there were valid proceedings pending before the Appellate Assistant Commissioner and thus he had jurisdiction to pass an order under Section 28(1)(a) if he thought that such an order should be passed on the facts and circumstances of the ease.
The Appellate Assistant Commissioner was, therefore, entitled, while dealing with the appeal pending before him, to pass an order under Section 28(1)(a) imposing a penalty.”
6. We find no reason to construe the expression “in the course of any proceedings under this Act” used in Sub-section (1) of Section 271 differently when the very same expression in Section 28(1) of the Indian Income-tax Act, 1922, was construed in the above manner. The contents of Section 251(1)(b) are also similar to the corresponding provision in the Indian Income-tax Act, 1922. With respect, we concur with the view of the Division Bench of the Allahabad High Court in the above decision.
7. Consequently, the reference is answered in favour of the Revenue and against the assessee by holding that the Tribunal’s view was not justified. No costs.