I.T.O gaining jurisdiction and passing penalty orders

In continuation of the Board's endorsement No.45/1186/69-ITJ dated 20th December, 1969, in reply to your letter No.J/36373/AT/2478-79/66-67/ CT dated 27-11-69, I have to say that the Board's decision against reference was because of small revenue effect. However, in principle the Tribunal's decision is not acceptable. The Board's stand on the subject stands detailed in circulars No.58/2/63-IT(Inv) dated 9-11-64 and No.3/40/68-IT(Inv) Instruction No.53 dated 27-5-69. The Board have again been advised by Ministry of Law that where a case for penalty u/s.271(1)(c) of I.T.Act, 1961 is referred to the IAC because the minimum penalty imposable exceeds Rs.1000/- the Inspecting Assistant Commissioner would not be divested of his jurisdiction, as a result of the appellate orders on the assessment quantum appeals bringing the minimum imposable penalty lower. The Board's instructions in the above noted circulars have therefore to be followed and if necessary, the principle can be tested in reference in some suitable case.

2. The Board have obtained the advice of Ministry of Law and agree with your view that the final observations of the Tribunal in their above noted order are ineffective. The Tribunal having set aside the penalty orders of the IAC on the ground that the minimum imposable penalty on the basis of reduced assessment quantum as per appellate orders, fell below the minimum limit prescribed for the Inspecting Assistant Commissioner., proceeded to observe - "It will however be open to the ITO to pass appropriate orders in case the assesses guilt is found to be covered by the provisions of Sec.271(1)(c)". As the Board does not accept the position of the I.T.O gaining jurisdiction and passing penalty orders, does not arise.