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Commissioner of Income-tax Vs. Ajaipat Singhania and Laxmipat Singhania - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberI.T.R. Nos. 137, 138, 139, 140, 144 and 145 of 1967
Judge
Reported in[1974]97ITR298(All)
ActsIncome Tax Act, 1961 - Sections 273 and 297(2); Income Tax Act, 1922 - Sections 18A(9)
AppellantCommissioner of Income-tax
RespondentAjaipat Singhania and Laxmipat Singhania
Appellant AdvocateB.L. Gupta, ;R.R. Misra and ;Gopal Behari, Advs.
Respondent AdvocateV.B. Upadhya, Adv.
Excerpt:
.....1961 act provides that, if the income-tax officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any assessee has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of sub-section (3) of section 212, he may direct that such person shall, in addition to the amount of tax, if any, payable by him, also pay a penalty as provided for therein. section 18a(9)provides that if the income-tax officer, in the course of any proceedingsin connection with the regular assessment',is satisfied that any assesseehas without reasonable cause failed to comply with the provisions of sub-section (3), he may impose penalty on the assessee. section 18a(9) clearly states that where..........of assessment. for instance, under section 18a(1) the income-tax officer is entitled to direct advance payment of tax, but the direction for advance payment of tax is not an order of assessment.'4. the penalty is sought to be imposed upon the assessees in theinstant references under section 18a(9) of the 1922 act. section 18a(9)provides that if the income-tax officer, 'in the course of any proceedingsin connection with the regular assessment', is satisfied that any assesseehas without reasonable cause failed to comply with the provisions of sub-section (3), he may impose penalty on the assessee. that provision issimilar to section 273(b) of the 1961 act. the question before us really isnot whether an order imposing a penalty under section 18a(9) is an orderof assessment under section.....
Judgment:

Dwivedi, J.

1. These are six, references under Section 256(1) of the Income-tax Act, 1961 (hereinafter called 'the 1961 Act'), at the instance of the Commissioner of Income-tax. The Tribunal has referred a common question of law :

'Whether, on the facts and in the circumstances of the case, it could be rightly held that no penalty can be levied on the assessee underSection 273(b) of the Act of 1961 for the assessment year under appeal for a default under Section 18A(3) of the Act of 1922 '

2. The overall pattern of facts and circumstances in all these cases in this : The assesses were assessed to tax for various years before the assessment year 1960-61. During assessment proceedings it appeared that they were liable to pay advance tax under Section 18A(3) of the Indian Income-tax Act, 1922 (hereinafter called 'the 1922 Act '). But they had not paid the advance tax. So proceedings were initiated against them under Section 273(b) of the 1961 Act. The assessees contended that no penalty could be imposed on them under Section 273(b). The Income-tax Officer rejected the contention and levied a penalty on them. Figures of penalty are different in different cases. The assessees then appealed to the Appellate Assistant Commissioner. The appellate authority accepted the contention of the assessees that no penalty could be imposed under Section 273(b). So the appeals were allowed. The department then filed an appeal to the Tribunal. The Tribunal agreed with the view of the appellate authority.

3. Section 273(b) of the 1961 Act provides that, if the Income-tax Officer, in the course of any proceedings in connection with the regular assessment, is satisfied that any assessee has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of Sub-section (3) of Section 212, he may direct that such person shall, in addition to the amount of tax, if any, payable by him, also pay a penalty as provided for therein. Section 297(1) of the 1961 Act repealed the 1922 Act. Sub-section (2) of Section 297 includes various saving clauses. Sub-section (2)(g) of Section 297 provides that, notwithstanding the repeal of the 1922 Act, 'any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act'. Counsel for the assessees, Sri Upadhya, has admitted before us that the assessment for the various years was completed on or after April 1, 1962. However, he has urged that a proceeding for the imposition of a penalty under Section 18A(9) of the 1922 Act is not a proceeding for assessment and that, accordingly, Sub-section (2)(g) of Section 297 will not apply. In support of his argument he has sought to rely on H.G. Misra and Co. v. Appellate Assistant Commissioner of Income-tax : [1969]72ITR489(All) .. In that case a Division Bench of this court has held that levy of advance tax under Section 18A is not a matter relating to the assessment of income-tax. Accordingly, it was said that proceedings for levy of penalty for non-payment of advance tax are not included in the proceedings for assessment of income-tax and that none of the Sub-clauses (a) to (m) of Section 297(2) will apply to save the liability to penalty for non-payment of advance tax under Section 18A. In M.M. Parikh v. Navanagar Transport and Industries Ltd. : [1967]63ITR663(SC) . it was urged before the Supreme Court that an order under Section 23A of the 1922 Act directing the payment of additional super-tax is 'an order of assessment' within the meaning of that expression in Section 34(3) of the 1922 Act. The Supreme Court rejected the contention and held that it is not an order of assessment under Section 34(3). Dealing with the contention, the Supreme Court observed :

'The Income-tax Act contemplates making of diverse orders by Income-tax Officers directing payment of sums of money by taxpayers which are of the nature of orders for payment of tax, but which are still not orders of assessment. For instance, under Section 18A(1) the Income-tax Officer is entitled to direct advance payment of tax, but the direction for advance payment of tax is not an order of assessment.'

4. The penalty is sought to be imposed upon the assessees in theinstant references under Section 18A(9) of the 1922 Act. Section 18A(9)provides that if the Income-tax Officer, 'in the course of any proceedingsin connection with the regular assessment', is satisfied that any assesseehas without reasonable cause failed to comply with the provisions of Sub-section (3), he may impose penalty on the assessee. That provision issimilar to Section 273(b) of the 1961 Act. The question before us really isnot whether an order imposing a penalty under Section 18A(9) is an orderof assessment under Section 34(3) of the 1922 Act but whether a proceedingfor the imposition of penalty under Section 18A(9) is 'in respect of anyassessment' for the year ending on March 31, 1962, or any earlier year.The expression ' in respect of any assessment for the year ' is used in Section 297(2)(g) of the 1961 Act. It may be that advance payment of taxunder Section 18A(3) is not a proceeding for assessment. But that is notthe question before us. Section 18A(9) clearly states that where theIncome-tax Officer, in the course of any proceedings in connection with theregular assessment, is satisfied that there has been a breach of Section 18A(3) by the assessee, he may impose a penalty. So the impositionof penalty under Section 18A(9) is made in connection with the regularassessment. We have little doubt in our mind that the imposition ofpenalty under Section 18A(9) has got a nexus with a regular assessment.The expression 'in respect of any assessment for the year' in Section 297(2)(g) has got a wide meaning. The words 'in respect of'means 'in relation to' or 'with respect to', (See United Provinces v.Mst. Atiqa Begum .). The imposition of penalty under Section 18A(9) hasundoubtedly got a relation to the regular assessment. Therefore, section 297(2)(g) will apply. Hence, a penalty can be imposed on the assessees under Section 273(b) of the 1961 Act.

5. We are taking a view which is different from the view of the Division Bench in H.G. Misra and Company's case. But we are relieved from the task of referring the references to a larger Bench because there is already a decision of the Supreme Court on the point in Commissioner of Income-tax v. Singh Engineering Works P. Ltd. : [1970]78ITR50(SC) The Supreme Court has held that imposition of penalty under Section 18A(9) may be made under Section 273(b) by virtue of Section 297(2)(g). We have, however, dealt with the argument of counsel for the assessees because he submitted that the aspect which he has presented to us has not been considered by the Supreme Court. The decision of the Supreme Court does not expressly deal with the aspect presented to us. But nevertheless the decision of the Supreme Court is binding on us. However, we have considered the aspect presented to us and have already come to the conclusion that there is no force in the argument.

6. Having regard to the foregoing discussion our answer to the question referred to us is that penalty under Section 18A(9) can be imposed under Section 273(b) of the Income-tax Act, 1961, for the assessment year under appeal before the Tribunal. The Commissioner of Income-tax shall get costs which we assess at Rs. 200. There shall be only one set of costs. Counsel's fee is assessed accordingly.

7. I. T. R. No. 139 of 1967.--For orders, see our judgment of date in the connected I. T. R. No. 137 of 1967 (above).


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