JUDGMENT
P.K. Mukherjee, J.
1. The notice dated March 19, 1981, under Section 274 read with Section 271 of the Income-tax Act, addressed to the writ petitioner has been challenged in the instant writ petition. By the said notice, the Income-tax Officer, 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 Section 271 of the Income-tax Act shall not be imposed on him for “concealing particulars of income” or “furnishing inaccurate particulars of such income ” to the income-tax authorities.
2. 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 Section 271(1)(c)(iii) provides for actual quantification of income.
3. 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 Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (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 clause (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.”
4. 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 Section 271(1)(c)(iii), before the income-tax authorities.
5. Mr. Bhattacharya submitted that in the present case, the original assessment order for the assessment year 1978-79 of the writ petitioner was passed by Sri Kanailal De, Income-tax Officer, “B” Ward, District-VIII, Calcutta, on March 31, 1981, under Section 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.
1.
Salary (Pension)
8,574
2.
D. H. as in last year.
3,000
3.
Profession :
Net profit as per a/cs.
73,531
Add : to receipt as per discussion above understatement of consultation fees
20,000
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 attributable to personal use
375
Car expenses estimated to be for personal use
5,000
Profession tax under section 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
6,957
(TDS–Rs. 1,578).
Bank interest
3,869
A. D. refund
948
Other ‘receipts
2,517
14,291
1,73,417
Less : Deduction under section 80C
11,512
80G
1,203
80L
3,000
15,715
Total income
1,57,702
6. On appeal from the said order, the Commissioner of Income-tax (Appeals) by order dated August 20, 1981, and after going through the materials placed before him and after hearing the Income-tax Officer, observed that the Income-tax Officer 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 asses-see 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 Income-tax Officer 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.
7. 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 Income-tax Officer, 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.
8. In conclusion, Mr. Bhattacharya submitted that no penalty can be imposed on the basis of the provisions as no offence has been committed under Section 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.
9. Nr. 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 Commissioner of Income-tax (Appeals) dated October 20, 1981, which has replaced the original order of assessment practically altogether, and there is no quantification of amount.
10. 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.
11. In the result, this writ petition is entitled to succeed. The rule is made absolute.
12. Let a writ in the nature of certiorari issue quashing the impugned notice dated March 13, 1981, issued by the Income-tax Officer, “B” Ward, District-VIII, Calcutta, which is annexure “M” to the writ petition.
13. 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.