Section 271(1B) — the law in short
What the courts have decided on section 271(1B), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Madhushree Gupta v Union of India
High CourtCuts both waysValidity unconfirmed
The Assessing Officer just wrote "initiate penalty proceedings under section 271(1)(c)" at the foot of the assessment order. Section 271(1B) now says that is enough. Can I still challenge it?
The provision survives, but the Delhi High Court read it consistently with Article 14 rather than at face value. Section 271(1B), inserted by the Finance Act 2008 with retrospective effect from 1 April 1989, deems a direction to initiate penalty proceedings in an assessment order to be satisfaction for section 271(1)(c). The petitioners said this legislatively presumes away a jurisdictional fact the Assessing Officer must find for himself. The Court did not strike the provision down; it said it had applied the settled principles by reading the amended provision so as to be in consonance with the safeguards contained in Article 14. The Revenue accepted that it does not reopen assessments that have already become final.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.