1. The short question as to the competency of an appeal arises in this reference. The Income-tax Officer came to the conclusion that the assessee had furnished an estimate of his income for the purpose of advance payment of tax which was false to his knowledge and he imposed a penalty upon him. The assessee appealed to the Appellate Assistant Commissioner, the appeal was dismissed, and then he appealed to the Tribunal and before the Tribunal the question arose whether the appeal was maintainable. The Tribunal took the view that the appeal did not lie.
2. Section 30 is the relevant section which provides for appeals against various orders made under the Act, and there is no provision in section 30 for an appeal under section 18A(9). But the contention of the assessee is that the order is not made under section 18A(9) but it is made under section 28(1)(c) and an appeal is provided under section 30 against an order made under section 28(1)(c). When we return to the section 18A(9), what it requires is that the Income-tax Officer must be satisfied that the assessee had furnished under sub-section(2) or sub-section(3) estimates of the tax payable by him which he knew or had reason to believe to be untrue. If the Income-tax Officer is satisfied, then the later part of the section introduces a legal fiction, and we will restrict ourselves to the provisions of section 18A(9)(a) with which we are concerned, and the legal fiction introduced is that the assessee shall be deemed to have deliberately furnished inaccurate particulars of his income, and the provisions of section 28, so far as may be, shall apply accordingly. The very significant feature of this section is that it does not itself confer any power up on the Income-tax Officer to levy a penalty. The power to levy a penalty only arises under the provision of section 28 and it is by a legal fiction that section 28 is made applicable and the provisions of section 28 apply to the facts which fall within the ambit of section 18A(9). When we turn to section 28(1)(c), that sub-section confers up on the Income-tax Officer, if he is satisfied that any person has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, to levy a penalty prescribed in that section. There is a proviso to section 18A(9) which, having conferred the power to impose a penalty under section 28, cuts down the quantum of the penalty by making the penalty much less in a case falling under section 18A(9). It is clear, in our opinion, that the legislature deliberately used this draftsmanship in order to avoid the necessity of amending section 30. If the power of imposing the penalty had been conferred up on the Income-tax Officer by section 18A(9) itself, then unless section 30 had been amended and an appeal against that order had been provided, no appeal would lie. But by the reason of this ingenious or skillful draftsmanship, whichever way one looks at it by importing section 28, the necessity of amending section 30 has been avoided because in the eye of the law the penalty imposed is not under section 18A(9) but under section 28(1)(c) and under section 30 the right of appeal is provided under orders made under section 28. On principle also there seems to be no reason why when in every case under the income-tax Act where a penalty is imposed, a right of appeal is conferred up on the assessee, in this particular case that important right should not be conferred up on the assessee. But, in our opinion, what clinches the matter is a reference to the section 47 which provides for recovery of penalties and there is no provision for recovery of penalty imposed under section 18A(9). If the contention of the Commissioner were to be accepted, then the assessee would be in the happy position of not having to pay the penalty at all because there is no provision in law for recovering the penalty. The reason why section 18A(9) is not mentioned in section 47 is because, again, the legislature has looked up on the imposing the penalty on the grounds mentioned in section 18A(9) as the exercise of power under section 28 and not under section 18A(9) and as section 47 provides for recovery of penalties under section 28 it was unnecessary to refer to section 18A(9).
3. In our opinion, the tribunal was in error in holding that the appeal was not competent. Therefore we must answer the question as follows : 'the order of the Income-tax Officer imposing the penalty was passed under section 28(1)(c) read with section 18A(9) and an appeal against that order lay to the Appellate Assistant Commissioner and thereafter to the Tribunal.'
4. The Commissioner to pay the costs.
5. Income-tax Reference No. 27 of 1955.
6. For the reasons given in the last reference, The North Deccan Transport Ltd., Nasik v. Commissioner of Income-tax, Bombay North, Kutch and Saurashtra, Ahmedabad (I. T. Reference No. 26 of 1955), the answer to the question in this reference is same as the answer in the last reference.
7. The Commissioner to pay the costs.
8. References answered accordingly.