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Commissioner of Income-tax Vs. Manohar Lal and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 106 of 1967
Judge
Reported in[1971]82ITR711(All)
ActsIncome Tax Act, 1961 - Sections 271(1) and 297(2)
AppellantCommissioner of Income-tax
RespondentManohar Lal and Co.
Appellant AdvocateB.L. Gupta, ;Gopal Behari and ;R.R. Misra, Advs.
Respondent AdvocateNone
Excerpt:
- - he held that the assessee had failed to furnish the returns of his income within the prescribed time as required under section 22(1) of the act of 1922 and, therefore, imposed a penalty under section 271(1)(a), income-tax 'act, 1961, in the sum of rs......to impose the penalties lay under the act of 1922 and not under the act of 1961. the quantum of penalty imposed for the year 1960-61 was reduced to 40% of the tax leviable upon the assessee. the assessee then appealed to the income-tax appellate tribunal and reiterated the contention that the power to impose the penalties should be found in the act of 1922 and was not contained in the act of 1961, inasmuch as the default by the assessee was committed with reference to section 22(1) of the act of 1922. it was urged that section 271 specifically referred to a default in proceedings under the act of 1961 and, therefore, that provision could not be employed for the the purpose of imposing a penalty for a default under the act of 1922. the tribunal accepted the contention of the assessee.....
Judgment:

Pathak, J.

1. The Income-tax Appellate Tribunal has referred the following question :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the penalties could not be imposed under Section 271(1) of the Income-tax Act, 1961 ?'

2. The assessee is a partnership firm. It filed voluntary returns of its income for the assessment years 1960-61 and 1961-62 on April 5, 1962. Thereturns should have been filed under Section 22(1), Indian Income-tax Act, 1922, on or before July 31, 1960, and July 31, 1961, respectively. The assessee explained that the delay in filing the returns were due to the strained relations between the parties. The explanation was not accepted by the Income-tax Officer. He held that the assessee had failed to furnish the returns of his income within the prescribed time as required under Section 22(1) of the Act of 1922 and, therefore, imposed a penalty under Section 271(1)(a), Income-tax 'Act, 1961, in the sum of Rs. 4,486 and Rs. 1,650 for the two years, respectively. The Appellate Assistant Commissioner of Income-tax, on appeal by the assessee, rejected the contention that the power to impose the penalties lay under the Act of 1922 and not under the Act of 1961. The quantum of penalty imposed for the year 1960-61 was reduced to 40% of the tax leviable upon the assessee. The assessee then appealed to the Income-tax Appellate Tribunal and reiterated the contention that the power to impose the penalties should be found in the Act of 1922 and was not contained in the Act of 1961, inasmuch as the default by the assessee was committed with reference to Section 22(1) of the Act of 1922. It was urged that Section 271 specifically referred to a default in proceedings under the Act of 1961 and, therefore, that provision could not be employed for the the purpose of imposing a penalty for a default under the Act of 1922. The Tribunal accepted the contention of the assessee and allowed the appeals and directed that the penalties be deleted. At the instance of the Commissioner of Income-tax the present reference has been made.

3. It seems clear to us that the Tribunal is in error. Section 297(2)(g) of the Act of 1961 provides that a proceeding for the imposition of a penalty may be initiated and such penalty may be imposed under that Act 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. The voluntary returns were filed after April 1,1962, and any assessment proceeding taken by the Income-tax Officer could be taken only after that date. There is nothing to show that the assessment proceeding in respect of the two years was completed before April 1, 1962. A similar question arose before the Supreme Court in Jain Brothers v. Union of India, [1970] 77 I.T.R. 107 (S.C.). and that court held that, upon the terms of Section 297(2)(g), the only possible conclusion was that the penalty proceedings had to be intiated and the penalty imposed in accordance with Section 271 of the Act of 1961. That decision was followed by the Supreme Court in Commissioner of Income-tax v. Singh Engineering Works Pvt. Ltd., [1970] 78 I.T.R. 90 (S.C.). The same view has been taken by a Bench of this court in Commissioner of Income-tax Singhal Bros., I.T.R. No. 89 of 1966, decided by Oak C.J. and Katju J, on February.25, 1970.

4. Accordingly, we answer the question referred in the negative, against the assessee and in favour of the Commissioner of income-tax.

5. As the assessee has not appeared before us, there is no order as to costs. Counsel's fee is assessed at Rs. 200.


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