Judgment :- RAMANUJAM J. The assessee in this case is doing business in commission and consignment sales of plantains. For the assessment year 1960-61, he returned a loss of Rs. 1, 736 as an individual. The Income-tax Officer found from the assessee's account that a sum of Rs. 32, 466 had been credited during the assessment year in the fictitious name of one P. Shanmugam and a major portion of the same stood debited during the year. Before the Income-tax Officer the assessee had ultimately admitted that P. Shanmugam is a fictitious name and that the credit entry in that account really represented his own transactions in consignment sales of plantains and that the credits represented his profits and the debits his losses in such sales and offered for assessment the closing credit balance of Rs. 6, 062 in the name of P. Shanmugam. But the Income-tax Officer while treating the credits as the assessee's profits, however, declined to treat the debits as the losses of the assessee. However, taking a liberal view, of the matter, and allowing for probable loss in the consignment sales, the Income-tax Officer estimated the net profit in consignment sales at Rs. 25, 000 and, therefore, converted the loss of Rs. 1, 736. returned by the assessee into a profit of Rs. 23, 364 by his order, dated March, 30, 1963. As the Income-tax Officer was satisfied that the assessee had concealed a good portion of his profits in consignment sales, he initiated penalty proceedings and issued a notice under section 274(1) of the Income-tax Act. But, later he referred the assessee's case to the Inspecting Assistant Commissioner under section 271(2) for taking action under section 271(1)(c) of the Act. After such reference the Inspecting Assistant Commissioner, after calling for the assessee's objection and after giving him an opportunity of hearing, levied a penalty of Rs. 5, 400 on December 27, 1963, under section 271(1)(c) on the basis that there has been a concealment of income to the extent of Rs. 25, 000 by the assessee The assessee filed an appeal to the Tribunal against that order. 5, 400 on December 27, 1963, under section 271(1)(c) on the basis that there has been a concealment of income to the extent of Rs. 25, 000 by the assessee The assessee filed an appeal to the Tribunal against that order. Before the Tribunal he not only questioned the order of levying penalty on merits, but also questioned the competency of the Inspecting Assistant Commissioner to pass the penalty order in question under section 271(1)(c) on the ground that section 274(2) conferred on the Inspecting Assistant Commissioner the power of the Income-tax Officer under section 271(1)(c) and that, therefore, the Inspecting Assistant Commissoner has also to satisfy himself in the course of the assessment proceedings that the assessee had concealed his income. It was also contended that the Inspecting Assistant Commissioner in this case did not make the assessment against the assessee nor did he satisfy himself in the course of such proceedings that the assessee had concealed income. The Tribunal rejected the said contentions of the assessee observing that the proceedings referred to in section 271(1)(c) did not mean assessment proceedings only but meant any proceedings under the Act including penalty proceedings, that as such the Inspecting Assistant Commissioner acting under section 274(2) could satisfy himself in the course of the penalty proceedings that the assessee has concealed income, that if the assessee's contentions where to be accepted, it would mean that the Inspecting Assistant Commissioner cannot levy penalty in cases referred to him by the Income-tax Officer after completion of the assessment and that such a construction would render section 274(2) otiose. On the merits the Tribunal held that the assessee by secreting his profits in a fictitious account had deliberately attempted to conceal the income with a view to escape tax liability and that the penalty of Rs. 5, 400 levied against the assessee was not excessiveAt the instance of the assessee the Tribunal has referred to us the following question "Whether, on the facts and in the circumstances of the case, the Inspecting Assistant Commissioner had jurisdiction to pass the order of penalty under section 271(1)(c) read with section 274(2) of the Income-tax Act, 1961 ?" * Before us the question as to whether there was any concealment of income, or whether the penalty was properly levied in the case, or the quantum thereof was not raised by the assessee. The only question raised is as to whether the Inspecting Assistant Commissioner acting under section 274(2) has to satisfy himself that the assessee has concealed the income in the course of the assessment proceedings. Section 271(1), so far as it is relevant is set out below Section 271(1) "If the Income-tax Officer or the Appellate Assistant Commissioner 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 twenty per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided, if the income as returned by such person had been accepted as the correct income." * The above section contemplates the Income-tax Officer or the Appellate Assistant Commissioner being satisfied in the course of any proceedings under the Act that the assessee has concealed the particulars of income, before initiating proceedings for levy of penalty. As already stated, the Tribunal proceeded on the basis that the words "any proceedings" include not only assessment and appellate proceedings but also penalty proceedings. But the learned counsel for the revenue does not want to sustain that reasoning. As a matter of fact he concedes that the view of the Tribunal cannot at all be sustained in view of certain rulings of the Supreme Court taking the view that "any proceedings" in section 271(1) will mean only proceedings other than penalty proceedings. We have to, therefore, proceed on the basis that the words "any proceedings" occurring in section 271(1) will not take in penalty proceedingsTherefore, the question is whether the Inspecting Assistant Commissioner to whom the penalty proceedings are referred under section 247(2) should satisfy himself about the concealment of income in the course of the assessment proceedings. Admittedly, the Inspecting Assistant Commissioner to whom the penalty proceedings are referred is not an assessing or any appellate authority and, therefore, he cannot satisfy himself about the concealment of income in the course of the assessment proceedings. Admittedly, the Inspecting Assistant Commissioner to whom the penalty proceedings are referred is not an assessing or any appellate authority and, therefore, he cannot satisfy himself about the concealment of income in the course of the assessment proceedings. Though the Inspecting Assistant Commissioner has been conferred with all the powers under Chapter 21 for the imposition of penalty it cannot mean that he has got the powers to assess and to satisfy himself about the concealment of income in the course of the assessment proceedings. Therefore, the power under section 271(1)(c) to levy a penalty is conferred on the Inspecting Assistant Commissioner and that power cannot be taken away on such a construction being given to section 271 so as to mean that he himself should be satisfied about the concealment of income in the course of the assessment proceedings. Normally, a case is referred under section 274(2) to the Inspecting Assistant Commissioner by the Income-tax Officer either after the close of the assessment or when the assessment, proceedings are about to be finalised. If the construction contended for by the assessee is to be accepted, the Inspecting Assistant Commissioner cannot exercise the power to impose penalty unless he imposes the levy during the course of the assessment proceedings taken by him. It is true, the contention advanced on behalf of the assessee finds support from the decision in Ram Chandra Sarda v. Income-tax Officer. In that case the Income-tax Officer had completed the assessment of an assessee for the year 1963-64 on March 31, 1965. On the same day he issued a notice under section 274 read with section 271 of the Income-tax Act, 1961 "In our opinion, investing the Inspecting Assistant Commissioner, to whom the matter is referred, with all the powers conferred under this Chapter, namely Chapter XXI, for imposition of penalty, is an enabling provision, but it does not mean, and cannot possibly mean, that when a matter is referred to the Inspecting Assistant Commissioner, he has to follow all the steps de novo. Some steps have properly got to be taken by the Income-tax Officer who has been given the power to refer in particular cases the matter of penalty to the Inspecting Assistant Commissioner." * In Commissioner of income-tax v. Angidi Chettiar the Supreme Court, while considering a corresponding provision in section 28 of the Income-tax Act, 1922, had stated at page 745 "The power to impose penalty under section 28 depends upon the satisfaction of the Income-tax Officer in the course of proceedings under the Act ; it cannot be exercised if he is not satisfied about the existence of conditions specified in clauses (a), (b) or (c) before the proceedings are concluded. The proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer. Satisfaction before conclusion of the proceeding under the Act, and not the issue of a notice or initiation of any step for imposing penalty is a condition for the exercise of the jurisdiction." * If, as pointed out by the Supreme Court, the penalty proceedings have to be commenced only after the completion of the assessment proceedings on the basis of the satisfaction arrived at by the Income-tax Officer earlier during the assessment proceedings, there is no possibility of the Inspecting Assistant Commissioner acting under section 274(2), satisfying himself as to the existence of the conditions specified in clause (c) of section 271(1) in the assessment proceedings. The position appears to be that once the Income-tax Officer initiates penalty proceedings after satisfying himself as to the existence of the conditions specified in section 271(1)(c) he refers the matter to the Inspecting Assistant Commissioner it he finds that the penalty leviable exceeds Rs. 1, 000, and after such reference the Inspecting Assistant Commissioner continues the penalty proceedings there is no necessity nor is it possible for him to form an opinion as to whether there was concealment of income during the assessment proceedings. 1, 000, and after such reference the Inspecting Assistant Commissioner continues the penalty proceedings there is no necessity nor is it possible for him to form an opinion as to whether there was concealment of income during the assessment proceedings. In Sivagaminatha Moopanar & Sons v. Income-tax Officer this court has expressed that the proceedings for the levy of penalty must be initiated by an authority when such authority is in seisin of the assessment or other proceedings in the course of which it is found that the assessee has brought himself within the mischief of section 28 ; but when once notice has been issued, the jurisdiction of the authority to continue the proceedings is not dependdent upon the continuance of the proceedings in the course of which the penalty proceedings came to be initiated and that the penalty could be levied notwithstanding that, on the date of the actual order of levy, the proceedings in the course of which the concealment was detected had been completed or stood terminated. In fain Brothers v. Union of India the Supreme Court was of the view that it is the satisfaction of the Income-tax Officer which attracts the provisions relating to penalty and that whatever the stage at which the satisfaction is reached, the scheme of sections 274(1) and 275 is that the order imposing penalty must be made after the completion of the assessment. As per this decision, levy of penalty could be made only after the assessment is completed, and if that is the true position, the Inspecting Assistant Commissioner, to whom penalty proceedings which have been validly initiated by the Income-tax Officer are referred, cannot be expected to form the satisfaction at the stage of the assessment proceedings which should have been completed by the Income-tax Officer even at the stage of the initiation of the penalty proceedingsOn a due consideration of the scope and effect of the provisions for sections 271(1) and 274(2) and the relative decisions dealing with their true scope, we are of the view that the Inspecting Assistant Commissioner is substituted in the place of the Income-tax Officer for the imposition of penalty under section 271(1)(c) at a particular stage of the penalty proceedings and, therefore, it is not necessary for him to initiate the penalty proceedings afresh after an independent satisfaction as to the concealment of income. The true position appears to be this. In the first place, the Income-tax Officer has to be satisfied in the course of the assessment or other proceedings that there has been a concealment of income by an assessee. Then he initiates proceedings and passes an order himself levying a penalty if the penalty leviable is less than Rs. 1, 000, but if the penalty leviable exceeds Rs. 1, 000, he refers the matter to the Inspecting Assistant Commissioner who has been empowered to act as an Income-tax Officer for the purpose of the levy of penalty. It, therefore, appears to be that it is the Income-tax Officer or the Appellate Assistant Commissioner who initiates the penalty proceedings on the basis of a satisfaction come to by him in the course of assessment or other proceedings under the Act that the assessee has concealed his income, and it is only on this foundation laid by the Income-tax Officer, the Inspecting Assistant Commissioner proceeds to act, and he being a person unconnected with the regular assessment proceedings cannot and could not initiate proceedings under section 271(1)(c). The mere fact that the Inspecting Assistant Commissioner is clothed with the power to levy penalty under section 271 by virtue of section 274(2), he cannot be said to have been empowered to deal with assessment proceedings and to initiate penalty proceedings on his independent satisfaction that the assessee has concealed his income in the course of the assessment proceedings. With respect, we are not inclined to accept the view adopted by Basu J. in Ram Chandra Sarda v. Income-tax Officer. Though no exception could be taken to the general observations of the learned judge that, where the powers and duties are inter-connected, it is not possible to separate one from the other in such a way that powers may be delegated while duties are retained and vice versa, and that normally the delegation of powers takes with it the duties, the conclusion that the Inspecting Assistant Commissioner to whom the penalty proceedings are referred by the Income-tax Officer after they had been duly initiated in accordance with section 271(1)(c) should again initiate afresh penalty proceedings after satisfying himself in the assessment proceedings that there has been a concealment of income cannot be accepted as laying down the correct position in law. We are, therefore, of the view that in this case the order levying penalty passed by the Inspecting Assistant Commissioner under section 271(1)(c) read with section 274(2) cannot be said to be invalid. The question is, therefore, answered in the affirmative and against the assessee. The Revenue will have its costs. Counsel's fee Rs. 250Question answered in the affirmative.