Full Judgment Text
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PETITIONER:
COMMISSIONER OF INCOME-TAX, DELHI (CENTRAL) NEW DELHI
Vs.
RESPONDENT:
M/S. SINGH ENGINEERING WORKS (P) LTD. KANPUR
DATE OF JUDGMENT:
11/08/1970
BENCH:
GROVER, A.N.
BENCH:
GROVER, A.N.
SHAH, J.C.
HEGDE, K.S.
CITATION:
1971 AIR 95 1971 SCR (1) 769
1970 SCC (2) 428
ACT:
Income-tax Act (43 of 1961), ss. 212, 273 and 297 (2)(g)-
Proceedings under s. 18-A of the 1922-Act-Assessment,
completed after 1st April 1962-Imposition of penalty under
1961 Act-Validity.
HEADNOTE:
The assessee was required under s. 18A(1) of the Income-tax
Act, 1922, to make advance payments of tax for assessment
years 1960-61 and 1961-62. The assessee made his own
estimates of the tax for the two years and paid the amounts.
But then the assessee filed returns of income for the two
years, the Income-tax Officer assessed the total income of’
the assessee on January 21, 1963, at much higher figures for
the two years, and held that the assessee furnished
inaccurate and untrue estimates if tax and imposed penalties
under s. 273 of the 1961-Act. The Tribunal held that the
’Penalties could not be imposed, because, (1) the default
under s. 18A of the 1922-Act could not be treated as a
default under the 1961 Act; and (2) s.297(2)(g) of the 1961-
Act did not save the proceedings under s.18A of the 1922-
Act.
In a reference tothis Court, under s.257 of the 1961 Act,
HELD : Section212 of the 1961 Act corresponds to s.18A(2) of
the 1922-Act and s.273 of the 1961-Act, which empowers the
levy of penalty corresponds to s. 18A(9) of the 1922-Act.
According to s. 297(2) (g) of the 1961-Act, a proceeding for
the imposition of a penalty in respect of an assessment for
the year ending on 31st March 1962 or any earlier year,
which is completed on or after 1‘st April 1962, may be
initiated, and the penalty may’ be imposed under the new
Act. The sub-section is applicable to the present case,
since the assessment was completed after 1st April 1962.
Therefore, penalty could be imposed under the 1961-Act, that
is, under s. 273, which will apply mutatis mutandis to the
proceedings. [770 H; 771 A-B; 722 B-C]
M/s. Jain Bros. & Ors. v. Union of India. [1970] 3 S.C.R.
253 followed.
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JUDGMENT:
CIVIL APPELLATE JURISDICTION : Income-tax Reference Cases
Nos. 1 and 2 of 1969.
References under s. 257 of the Indian Income-tax Act, 1961
made by the Income-tax Appellate Tribunal, Allahabad Bench
in R.A. Nos. 1253 and 1254 of 1967-68 (I.T.A. Nos. 13922 and
13923 of 1965-66.
R. N. Sachthey and Gobind Das, for the appellant (in both
the cases).
P. N. Pachauri, J.P. Goyal and Sobhamal Jain, for the
respondent (in both the cases).
169Sup-CI(P)/71-5
770
The Judgment of the Court was delivered by
Grover, J. The respondent company which is an assessee was
required by the Income tax Officer by notices issued under
s. 18A (1) of the Indian Income tax Act 1922, hereinafter
called the "Old Act" to make an advance payment of tax
amounting to Rs. 3,17,077 for the assessment year 1960-61
and Rs. 3,54,911 for the assessment year 1961-62. The
assessee chose to file its own estimate of tax under s.
18A(2) and in accordance therewith it paid two instalments
of advance tax of Rs. 38,333/- each for the assessment year
1960-61 and three instalments of Rs. 12,875/each for the
assessment year 1961-62. Thereafter the assessee filed
revised estimates of tax in the month of March 1960 and
March 1961 respectively estimating the tax at Rs. 1,80,000/-
for each of the assessment years on a total income of Rs. 4
lakhs. The balance of advance tax as per its revised
estimate was paid in time after deducting the instalments
which had already been paid. The assessee subsequently
filed its returns of income for the aforesaid two years
declaring the total income of Rs. 4,53,942/- and Rs.
7,02,383/- respectively. The Income tax Officer completed
the assessment of total income of Rs. 5,35,000/- and Rs.
8,99,029/- for the assessment years 1960-61 and 1961-62 on
January 21, 1963 after the Income tax Act 1961, hereinafter
called the "New Act" had come into force. The Income tax
Officer took the view that the assessee had furnished
inaccurate, and untrue estimates of tax and had not given
any satisfactory explanation in respect of them. He imposed
penalties under s. 273 of the new Act amounting to Rs.
13,700/- and Rs. 12,342/- for the assessment years 1960-61
and 1961-62 respectively. Appeals to the Appellate
Assistant Commissioner in the matter of imposition of
penalty were rejected. The Appellate Tribunal held that the
penalties could not have been imposed under the provisions
of s. 273 of the new Act in respect of the two assessment
years in question. It was said inter alia, that in the
absence of any deeming provision in the new Act the default
under s. 18A of the old Act could not be treated as a
default under s. 212 of the new Act and that s. 297(2) (g)
of the new Act did not save the proceedings under s. 18A of
the old Act. A question of law was referred directly to
this Court under the provisions of s. 257 of the new Act
owing to the conflict between the decisions of the various
High Courts.
Section 18A of the old Act makes provision for advance pay-
ment of tax. Sub-section (9) provides, inter alia, for the
imposition of penalty, if the Income tax Officer is
satisfied that the assessee has furnished estimates of the
tax payable by him which he knew or had reason to believe to
be untrue. In the new Act s. 212 makes provision for the
estimate by the assessee and payment
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771
of tax in accordance with that estimate. Section 273 of the
new Act empowers the Income tax Officer to levy penalty on
an assessee where fie finds at the time of regular
assessment that the assessee had furnished, under s. 212, an
estimate of the advance tax payable by him which he knew or
had reason to believe to be untrue.
As stated before the Tribunal was of the opinion that s. 297
(2) (g) of the new Act did not save proceedings under s. 18A
of the old Act. According to that provision any proceeding
for the imposition of a penalty in respect of any assessment
for the year ending on 31st day of March 1962 or any earlier
year which is completed on or after the first day of April
1962 may be initiated and any such penalty may be imposed
under the new Act.
In M/s. Jain Bros. & Others v. The Union of India(1) this
Court examined the provision of s. 271 which also appears in
Chapter XXI under which s. 273 is to be found and the
provision of s.297 (2) (g) of the new Act. This is what was
stated in that case
"We are further unable to agree that the
language of s. 271 does not warrant the taking
of proceedings under that section when a
default has been committed by failure to
comply with a notice issued under s. 22 (2) of
the Act of 1922. It is true that cl. (a) of
sub-s. (1) of s. 271 mentions the
corresponding provisions of the Act of 1961
but that will not make the part relating to
payment of penalty inapplicable once it is
held that s. 297(2)(g) governs the case. Both
ss. 271(1) and 297(2)(g) have to be read
together and in harmony and so read the only
conclusion possible is that for the imposition
of a penalty in respect of any assessment for
the year ending on March 31, 1962 or any
earlier year which is completed after first
day of April 1962 the proceedings have to be
initiated and the penalty imposed in
accordance with the provisions of s. 271 of
the, Act of 1961. Thus the assessee
would be
liable to a penalty as provided by s. 271(1)
for the default mentioned in s. 28(1) of the
Act of 1922 if his case falls within the terms
of s. 297(2)(g). We may usefully refer to
this Court’s decision in Third Income tax
Office,-, Mangalore v. Damodar Bhat (71 I.T.R.
806) with reference to s. 297(2)(j) of the Act
of 1961. According to it in a case falling
within that section in a proceeding for
recovery of tax and penalty imposed under the
Act of 1922 it is not required that all the
sections of the new Act relating to recovery
or collection should be literally applied but
only such of the sections will apply as are
appropriate in the -particular case
(1) (1970) 3S.C.R. 253
772
and subject, if necessary, to suitable
modifications. In other words, the procedure
of the new Act will apply to cases
contemplated by s. 297 (2) (j) of the new Act
mutatis mutandis. Similarly the provision of
S. 271 of the Act of 1961 will apply mutatis
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mutandis to proceedings relating to penalty
initiated in accordance with s. 297 (2)(g) of
that Act". ,
In our judgment s. 297(2)(g) is clearly applicable to the
present case inasmuch as the assessment was completed on or
after the first day of April 1962. The provisions of the
new Act contained in s. 273 will apply mutatis mutandis to
proceedings relating to penalty initiated in accordance with
s. 297(2)(g) of the new Act. The question which has been
referred to us is answered in the affirmative and in favour
of the Commissioner of Income tax who will be entitled to
his costs in this Court.
V. P. S.
773