Meaning of “In the course of any proceedings under this act”

The meaning of in the course of any proceedings under this act of the Income Tax Act is not defined in the act itself. But we can take guidance from decisions by various high courts. Here are excerpts of courts orders in which the Hon’ble Tribunal tried to explain the meaning of in the course of any proceedings under this act.

Meaning of in the course of any proceedings under this act by court

The phrase “in the course of any proceedings under this act” of the Income Tax Act came up before various high courts & Tribunal as detailed under :

1.Hon’ble ITAT-Amritsar explained the meaning of “in the course of any proceedings under this act ” while delivering judgment in Smt. Kavita Kapoor Vs. ITO [2007] 110 TTJ (ASR. – TRIB.) 50 as under :

Meaning : The expression used in section 271(1) is ‘in the course of any proceedings under this act’. Such expression has very wide connotation and is not confined to the regular assessment alone. Such expression cannot be given restrictive meaning so as to confine only to regular assessment.

What is required to be seen is when the factum of a particular default came to the knowledge of the assessing officer and at what point of time the authority concerned assumed jurisdiction to initiate such proceedings. If such default came to the notice of the assessing officer at the time of completing the first assessment and the assessing officer assumed jurisdiction by issue of notices under sections 271(1)(a) and 271(1)(c), the material order would be the first assessment.

2. Hon’ble ITAT-Bangalore explained the meaning of “in the course of any proceedings under this act” while delivering judgment in Muninaga Reddy Vs. Asstt. CIT [2013] 37 TAXMANN.COM 440 (BANG. – TRIB.) as under :

Meaning: The words ‘in the course of any proceedings under this act’ in section 271(1) are prefaced by the satisfaction of the assessing officer or the commissioner (appeals). When a survey is conducted by a survey team, the question of satisfaction of assessing officer or the commissioner (appeals) or the commissioner does not arise.

It is thus obvious that the expression ‘in the course of any proceedings under this act’ cannot have the reference to survey proceedings. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the return filed by him.

Section 271 of Income Tax Act

Failure to furnish returns, comply with notices, concealment of income, etc.

271.(1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person— (a) [***] (b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits,

he may direct that such person shall pay by way of penalty,—

(i) [***]

(ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure ;

(iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.

Explanation 1.—Where in respect of any facts material to the computation of the total income of any person under this Act,—

(A) such person fails to offer an explanation or offers an explana- tion which is found by the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner to be false, or

(B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him,

then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.

Updated up to Finance Act 2021.