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Commissioner of Income-tax Vs. V.G. Panneerdas and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 263 of 1970 (Reference No. 51 of 1970)
Judge
Reported in[1978]112ITR225(Mad)
ActsIncome Tax Act, 1961 - Sections 271(1), 271(2) and 297(2); Income Tax Act, 1922 - Sections 23(3)
AppellantCommissioner of Income-tax
RespondentV.G. Panneerdas and Co.
Appellant AdvocateJ. Jayaraman, Adv.
Respondent AdvocateT.S. Ramu, Adv.
Cases ReferredJain Brothers v. Union of India
Excerpt:
- - in the words of the supreme court--see [1970] 77 itr 107, 117: we are further unable to agree that the language of section 271 does not warrant the taking of proceedings under that section when a default has been committed by failure to comply with a notice issued under section 22(2) of the act of 1922. it is true that clause (a) of sub-section (1) of section 271 mentions the corresponding provisions of the act of 1961, but ihat will not make the part relating to payment of penalty inapplicable once it is held that section 297(2)(g) governs the case......that the penalty of rs. 12,200 levied under section 271(1)(c) of the income-tax act, 1961, for the assessment year 1961-62 is illegal? 2. whether, on the facts and in the circumstances of the case, the appellate tribunal was right in law in holding that the penalty of rs. 6,404 levied under section 271(1)(c) for the assessment year 1959-60 is illegal ? 3. whether, on the facts and in the circumstances of the case, the appellate tribunal was right in law in holding that the penalty of rs. 8,700 levied under section 271(1)(c) for the assessment year 1960-61 is illegal ? 4. whether, on the facts and in the circumstances of the case, the appellate tribunal was right in law in holding that the penalty of rs. 6,300 levied under section 271(1)(c) for the assessment year 1961-62 is illegal?' 2......
Judgment:

Ramaswami J.

1. The following four questions are referred under Section 256 of the Income-tax Act:

'1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 12,200 levied under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1961-62 is illegal?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 6,404 levied under Section 271(1)(c) for the assessment year 1959-60 is illegal ?

3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 8,700 levied under Section 271(1)(c) for the assessment year 1960-61 is illegal ?

4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the penalty of Rs. 6,300 levied under Section 271(1)(c) for the assessment year 1961-62 is illegal?'

2. One of the assessees is a firm of partnership and the other is a partner in the partnership. The assessment years in question in respect of the firm is 1961-62 and that for the individual partner are 1959-60, 1960-61 and 1961-62. The firm submitted a return in respect of the assessment year 1961-62 on August 20, 1961, and the individual partner submitted his return on April 9, 1960, November 10, 1960, and August 30, 1961, for the assessment years 1959-60, 1960-61 and 1961-62, respectively. The assessments under Section 23(3) of the Indian Income-tax Act, 1922, were made on February 29, 1964. Thereafter, penalty proceedings were initiated and notice under Section 274(2) of the Income-tax Act, 1961, was issued in respect of all the assessment years on May 26, 1965, and orders imposing penalty were issued by the Inspecting Assistant Commissioner on February 25, 1966. The assessee preferred appeals to the Tribunal. Before the Tribunal they conceded that they had concealed the particulars of their income and furnished inaccurate particulars and that the penalties were otherwiseexigible but it was contended that only the provisions of the 1922 Act were applicable and not Section 271(1)(c) of the Income-tax Act, 1961. The Tribunal accepted their contention and held that penalties could have been levied only under the 1922 Act and that the penalty orders made under Section 271(1)(c) were, therefore, liable to be quashed. The Tribunal also held that the penalties levied were not excessive. Subsequent to the decision of the Tribunal, the Supreme Court in Jain Brothers v. Union of India : [1970]77ITR107(SC) has held that even in respect of concealment prior to the assessment year 1962-63, the provisions of Section 271(1)(c) were applicable. In the words of the Supreme Court--See [1970] 77 ITR 107, 117:

'We are further unable to agree that the language of Section 271 does not warrant the taking of proceedings under that section when a default has been committed by failure to comply with a notice issued under Section 22(2) of the Act of 1922. It is true that Clause (a) of Sub-section (1) of Section 271 mentions the corresponding provisions of the Act of 1961, but ihat will not make the part relating to payment of penalty inapplicable once it is held that Section 297(2)(g) governs the case. Both Sections 271(1) and 297(2)(g) have to be read together and in harmony and so read the only conclusion possible is that for the imposition of a penalty in respect of any assessment for the year ending on March 31, 1962, or any earlier year which is completed after the first day of April, 1962, the proceedings have to be initiated and the penalty imposed in accordance with the provisions of Section 271 of the Act of 1961. Thus the assessee would be liable to a penalty as provided by Section 271(1) for the default mentioned in Section 28(1) of the Act of 1922 if his case falls within the terms of Section 297(2)(g)-'

3. This decision directly answers all the questions referred to us in favour of the revenue.

4. But the learned counsel for the assessees contended, relying on our judgment in Commissioner of Gift-tax v. Muthukumaraswami Mudaliar : [1975]98ITR540(Mad) , that in these cases the returns were submitted prior to the coming into force of the Act and that, therefore, the law that was applicable on the date of filing of the return alone could be applied and not the provisions contained in the Income-tax Act, 1961. That decision related to an amendment of a particular provision and the applicability of that provision to an individual case when it was not in terms made retrospective. But the provision in Section 297(2)(g) specifically mentions that the applicability of the penal provision is to be with reference to the date of assessment and not with reference to the date of filing of the returns. Therefore, the general principle decided in Muthukumaraswami Mudaliar's case : [1975]98ITR540(Mad) is not applicable and the decision of the Supreme Court is the direct authority against the contention of the assessees. We accordingly answer all the questions in the negative and in favour of the revenue. Revenue will be entitled to its costs. Counsel's fee Rs. 250.


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