Govt's to insert new sub-section to Section 271 of IT Act

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New Delhi, Mar 14 (UNI) The Government today said it proposes to insert a new sub-section (1B) in section 271 of the Incometax Act to clear doubts regarding powers of the assessing officer to levy penalty in case of concealment of income.

''In view of conflicting judicial opinion on this issue, it was necessary to make legislative intervention and settle the matter,'' said a statement.

The new sub-section provide that where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment, and such order contains a direction for initiating of penalty proceedings under sub-section (1) of section 271, such an order of assessment or reassessment shall be deemed to constitute satisfaction of the assessing officer for initiating penalty proceedings under sub-section (1) of that section.

In the context of levy of penalty under section 271 of the Income-tax Act, there has been an ongoing dispute between the Income-tax department and taxpayers on whether an assessing officer is required to record his satisfaction before initiating penalty proceedings.

There has been several litigation on the matter with Supreme Court, Delhi High Court, Calcutta High Court and Allahabad High Court passing different judgements.

The proposed amendment has been given retrospective effect in order to protect the revenue's contention on this issue in pending cases.

However, this retrospective effect will not prejudice taxpayers' right to agitate the levy of penalty on merits.

Further, while no separate satisfaction is required to be recorded before initiating penalty proceedings, it is still incumbent upon the assessing officer to record his satisfaction before levying the penalty.

''Accordingly, there is neither violation of the principle of natural justice nor any prejudice caused to the taxpayer as a result of the retrospective amendment,'' the statement said.


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