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Commissioner of Income-tax (Central) Vs. National Exhibitors - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 28 of 1970
Judge
Reported in[1973]88ITR210(P& H)
ActsIncome Tax Act, 1961 - Sections 271
AppellantCommissioner of Income-tax (Central)
RespondentNational Exhibitors
Appellant Advocate D.N. Awasthy and; B.S. Gupta, Advs.
Respondent Advocate S.K. Hirajee, Adv.
Cases ReferredJain Brothers v. Union of India
Excerpt:
.....- in the last paragraph of this decision, it has been clearly observed by their lordships that: in our judgment, section 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 section 273 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g) of the new act......271(1)(c) of the 1961 act. he calculated the penalty under section 271(1)(c) of the 1961 act and imposed a penalty of rs. 19,142, being 50 per cent, of the tax which would be payable by the firm. on appeal, the appellate assistant commissioner reduced the penalty by rs. 8. on a further appeal to the tribunal, the tribunal adopted a curious course. it levied the penalty up to 1st april, 1962 (the day on which the 1961 act came into force) under the 1922 act and for the default after 1st april, 1962, under section 271(1)(a) of the 1961 act. the net result was that a sum of rs. 15,500 was imposed as penalty by the tribunal instead of rs. 19,134 as reduced by the appellate assistant commissioner. the department being dissatisfied moved the tribunal for a reference under section 256(1) of.....
Judgment:

1. The Income-tax Appellate Tribunal, Chandigarh Bench, has referred the following two questions of law for our opinion :

'(1) Whether the substantive law of penalties could be held to be retrospective in character even in the absence of a specific statement in the Act which renders it retrospective

(2) Whether the same substantive law as is operative from April I, 1962, onwards is to be applied in respect of the offences committed prior to March 31, 1962?'

2. The assessment year in question is 1961-62. A notice was issued under Section 22(2) of the Indian Income-tax Act, 1922 (hereinafter referred to as ' the 1922 Act'), which was served on 26th July, 1961, asking the assessee-firm, Messrs. National Exhibitors, Amritsar, to file their return. The return was due in terms of the notice by 30th August, 1961, but it was filed on the 4th November, 1963. The assessment was completed on 25th March, 1965, on a total income of Rs. 82,062. As the return had not been filed in time, the Income-tax Officer issued a notice under Section 274 of the Income-tax Act, 1961 (hereinafter referred to as 'the 1961 Act'), calling upon the assessee to show cause why penalty under Section 271(1)(c) of the 1961 Act should not be imposed. After considering the assessee's reply to the show-cause notice, the Income-tax Officer held that a default had been committed which was punishable under Section 271(1)(c) of the 1961 Act. He calculated the penalty under Section 271(1)(c) of the 1961 Act and imposed a penalty of Rs. 19,142, being 50 per cent, of the tax which would be payable by the firm. On appeal, the Appellate Assistant Commissioner reduced the penalty by Rs. 8. On a further appeal to the Tribunal, the Tribunal adopted a curious course. It levied the penalty up to 1st April, 1962 (the day on which the 1961 Act came into force) under the 1922 Act and for the default after 1st April, 1962, under Section 271(1)(a) of the 1961 Act. The net result was that a sum of Rs. 15,500 was imposed as penalty by the Tribunal instead of Rs. 19,134 as reduced by the Appellate Assistant Commissioner. The department being dissatisfied moved the Tribunal for a reference under Section 256(1) of the 1961 Act and that is how the aforesaid two questions of law have been referred for our opinion.

3. After hearing the learned counsel for the parties, we are of the view that both these questions must be answered in the affirmative, that is, infavour of the department and against the assessee. This has to be so in view of the Supreme Court decisions in Jain Brothers v. Union of India, [1970] 77 I.T.R. 107(S.C) and Commissioner of Income-tax v. Singh Engineering Works (P.) Ltd., [1970] 78 I.T.R. 90 (S.C.)

4. The principal contention on behalf of the assessee is that in view of the provisions of Section 297(2)(g) of the 1961 Act, the penalty though leviable under the 1961 Act (i.e., under Section 271(1)), its quantum has to be determined under the 1922 Act, because the procedural law regarding penalty in the 1961 Act would be applicable, but not the substantive law. This contention seems to have some force in view of the provisions of Section 297 of the 1961 Act. To understand this contention, reference has to be made to Clause (g) with the substantive part of Section 297(2), which reads thus :

' 297. (2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (hereinafter referred to as the repealed Act),.........

(g) any proceedings 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:......'

5. The contention is that the word 'such' must be given a meaning and it can only be given a meaning by holding that the penalty had to be imposed under the 1922 Act. If the penalty had to be imposed under the 1961 Act, the use of the word ' such ' would be superfluous. However, in view of the clear pronouncement of the Supreme Court in Singh Engineering Works case, we have to negative this contenion. In the last paragraph of this decision, it has been clearly observed by their Lordships that:

' In our judgment, Section 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 Section 273 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with Section 297(2)(g) of the new Act.'

6. In the end of the preceding paragraph, their Lordships observed :

' Similarly, the provision of Section 271 of the Act of 1961 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with Section 297(2)(g) of that Act.'

7. It may be of interest to note that the learned judge, who spoke for the court in fain Brothers' case has made these observations. Therefore, we must proceed on the basis that Section 271 of the 1961 Act will apply to the present case because the assessment was completed after 1st of April, 1962. There is no escape from this conclusion in view of the decisions of the Supreme Court already referred to. Thus, in view of the authoritative decision of the Supreme Court, the view adopted by the Tribunal cannotbe sustained. There is no warrant for holding that part of the penalty would be under the 1922 Act and part under the 1961 Act.

8. For the reasons recorded above, the answer to the questions must go as recorded above. There will be no older as to costs.


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