JOSEPH, J. - These petitions are filled by an assessee under article 226 of the Constitution of India for quashing certain orders passed under section 66(1) of the Travancore Income-tax Act, imposing penalty for non-payment of income-tax. The 1st respondent is the Commissioner of Income-tax, Southern Division, Bangalore, and the 2nd respondent the Income-tax Officer, Trivandrum Circle, who passed the orders in question. The petition was assessed to income-tax for the accounting years 1121, 1122, 1123, 1125 and 1126. He did not pay the tax in time and he tool up the matter in appeal. At the time the orders under section 66 were passed, the assessments in respect of the years 1121-1123 were pending before the High Court in Income-tax Reference No. 24 of 1954 and the assessment for the other two years, before the Appellate Assistant Commissioner in appeal. Notwithstanding the pendency of these proceedings in which the validity of the assessments was questioned, the 2nd respondent treated the petitioner as a defaulter and imposed penalties for non-payment of the tax due under the assessments referred to above. The orders imposing penalty for the tax due in respect of the 5 years are sought to be quashed in these petition. According to the petitioner these orders were passed without jurisdiction and in any even the 2nd respondent should not have have exercised his discretion against the petitioner. The specific grounds on which the plea of absence of jurisdiction is based will be referred to later in dealing with the same. The petitioner prays for appropriate writs or directions quashing these orders. The 2nd respondent has filed a counter-affidavit refuting the allegations made by the petitioner regarding absence of jurisdiction. The circumstances under which the discretion vested in him exercised are also set forth in the affidavit.
The first point raised on behalf of the petitioner is that the 2nd respondent had no jurisdiction to impose penalty on the petitioner. The several grounds on which this point is pressed may now be considered. It is stated that part of the income was not assessable and that the Income-tax officer had no jurisdiction to treat such income as assessable. The argument is that since the order of assessment itself was passed without jurisdiction, the orders imposing penalty have also to be deemed as passed without jurisdiction. I am unable to accept this argument. The inclusion of non-assessable income will not doubt amount to an error in the exercise of jurisdiction but it cannot be said that such an error in making assessments amounts to an act done without jurisdiction. Learned counsel for the petitioner brought to my notice that Income-tax Reference No. 24 of 1954 covering the assessments in respect if the first three years was decided during the pendency of this petition and that in respect of part of the income assessed the High Court authorities. The orders imposing penalty were passed before the said decision was given and it cannot, therefore, have is also contended that imposition of penalty at least in respect of the tax due for the years 1121-1123 amounted to an abuse of jurisdiction as the question of the validity of the assessment was pending before the High Court at that time. There is nothing in the Income-tax Act which prohibits this imposition of penalty during the pendency of a reference to the High Court. The only point to be considered is whether the assessee was in default and, if he is, the Income-tax Officer has jurisdiction to levy penalty subject to the statutory limits regarding the quantum thereof. Another ground taken is that while in respect of the years 1121-1123 the assessments were completed on 15th August, 1951, penalty was imposed only on 17th September, 1955, and that the Income-tax officer had no jurisdiction to do so after the expiry of one year from the last date of the financial year in which the assessment was made. The argument is that the levy of penalty is one of the modes of recovery of tax under section 46 of the Indian Act corresponding to section 66 of the State Act. Section 66(7) provides as follow :
'Save in accordance with the provisions of sub-section (1) of section 56, or of the proviso to section 65, no proceedings for the recovery of any sum payable under this Act shall be commended after the expiration of one year from the last day of the financial year in which any demand is made under this Ac :
Provided that where the sum payable is allowed to paid by installments the period of one year herein referred to shall be reckoned from the date on which the last of such instalments was due.'
The argument can be accepted only if the levy of penalty is a proceeding for recovery of the tax. The provision for levying penalty no doubt occurs in section 46 which deals with the mode and time of recovery of tax. Expect for this, there is no reason to hold that the levy of penalty is mode of recovery tax. The various modes for recovery of tax are provided in section 46(2) and the following sub-sections. Tax and penalty are always kept distinct in the Act and liability for penalty arises only when the payment of tax is defaulted. I have pointed out in my order in O. P. No. 74 of 1955 that the power to levy penalty cannot be treated as am mode of recovery of tax. The same view has been held by my brother Varadaraja Iyengar, J., in Mathew v. Second Additional Income-tax Officer, Kottayam. Even if the petitioners argument is accepted I do not see how he can succeed as the Income-tax Officer had issued a certificate to the Collector of Trivandrum to recover the arrears under the Revenue Recovery Act. The petitioner has no case that the certificate was issued beyond the period of one year specified in section 66(7) under which it is sufficient if proceedings for recovery which is not resorted to within one year cannot be pursued thereafter. The explanation to section 46 of the Indian Act makes this clear. The absence of such an explanation in the Travancore Act is immaterial as the object of the explanation is only to explain the pre-existing law which was the same both under the Central and State Acts. Another argument was that while proceedings under the Revenue Recovery Act were going on, the Income-tax Officer had no jurisdiction to resort to section 46(1). Apart from the fact that the imposition of penalty is not a mode of recovery of tax there is the further fact that there is nothing in section 66 which prohibits resources to more than one mode of recovery concurrently. No other point was pressed in support of this contention that the orders passed were without jurisdiction.
The second point raised by the petitioner is that in levying penalty the 2nd respondent exercised his discretion arbitrarily and capriciously. It was urged that in view of the reference pending in the High Court and the appeal the Appellate Assistant Commissioner the 2nd respondent should not have passed these orders. The amount to be collected was comparatively large and the matter was pending for a long time. However strong a case the assessee may have in appeal it does not absolve him from the obligation of paying the tax within the time fixed in the order of assessment. The petitioner could have averted this calamity by paying the tax in time. It is true that is was open to the 2nd respondent not be take action under section 66(1) but he chose to exercise his discretion and levy penalty and in the circumstances of the case it cannot be said that such exercise was arbitrary or capricious. Learned counsel for the petitioner brought to my notice the decision of a single Judge of the Calcutta High Court in Ladhuram Taparia v. B.K. Bagchi. This decision no doubt lends some support to his argument. It was held that in the circumstances of that case, the Income-tax Officer had a duty to refrain from enforcing payment of tax and grant time to the assessee to pay it. This decision appears to have been reversed in appeal. The appellate judgment is not reported but Sampath Iyengar in the Appendix to his Commentary on the Indian Income-tax Act says that the decision was reversed in appeal. Other High Courts have dissented from this view at least in two reported decisions, Lord Krishna Sugar Mills Ltd. v. Income-tax Officer, Ambala, and Govardhan Lal Jagadish Kumar v. Commissioner of Income-tax, Lucknow. The contention of the petitioner is that the power given under section 45 is coupled with a duty and it was the duty of the 2nd respondent not to regard the petitioner who had gone up in appeal as a defaulter. If this position is correct there is no meaning in giving a discretion to the Income-tax Officer. With great respect I decline to follow the decision in Ladhuram Taparias case. Finally it was argued that in view of the decision of the High Court in Income-tax Reference No. 24 of 1954, the orders levying penalty should be quashed. What I am called upon to decide in these petitions is the validity of these orders as and when the same were passed. In view of the altered position brought about by the decision of the High Court the petitioner may move the appropriate authority under the Income-tax Act for relief regarding penalty and the decision of these original petitions will not be a bar to the same.
No other point arises in these petitions. The original petitions are therefore dismissed but in the circumstances I make no order as to costs.