T.K. Basu, J.
1. In this application the petitioner challenges three notices dated the 21st April, 1964, the 13th December, 1965 and the 21st December, 1965 for imposition of penalty issued under the provisions of Section 274 read with Section 271 of the Income-tax Act, 1961. The assessment was made under the provisions of the Indian Income-tax Act 1922, now repealed.
2. Mr. Siddharta Roy appearing on behalf of the petitioner contends that this point is concluded in favour of the petitioner by my judgment in the case of Narendra Sharma v. Income-tax Officer, Central Circle 15, Calcutta, Matter No. 213 of 1966 (Cal).
3. Counsel for the Revenue submitted before me that there are certain aspects of the matter which have not been considered by me in my above judgment. Considering the importance of the subject-matter, I gave leave to the Revenue to agitate these points in this application.
4. Mr. Dipankar Gupta appearing on behalf of the Revenue drew my attention in the first place to the provisions of Section 297(2)(a) of the new Act which provides that, where a return of income has been filed before the commencement of the new Act, proceedings for assessment for that year may be taken and continued as if the new Act had not been passed. Mr. Gupta contended that since the return of income in the present case was filed before the commencement of the new Act, proceedings for assessment could and had in fact been taken under the provisions of the repealed Act by virtue of the enabling provisions of Section 297(2)(a) of the new Act. Since the assessment proceedings were carried on under the old Act by virtue of the empowering provisions of Section 297(2)(a) of the new Act, the assessment proceedings should be held to be proceedings under the new Act. In that view of the matter, it should be held-that the first precondition to the applicability of Section 271 of the new Act which is that the Income-tax Officer or the Appellate Assistant Commissioner is satisfied 'in the course of any proceedings under this Act' has been complied with in the present case.
5. In support of this contention, Mr. Gupta drew my attention to a decision of the Madhya Pradesh High Court in the case of Commissioner of Income-tax, Madhya Pradesh and Nagpur v. Champalal Sukhram, reported in : 72ITR417(MP) . of the Report (at p. 73 of AIR) the following passage occurs:--
'The reasoning given by the Tribunal that, as Section 271(1) of the 1961 Act uses the expression in the course of any proceedings under this Act' and as the assessment proceedings in this case were under the 1922 Act, therefore, Section 271 could not be invoked for levy of penalty is altogether' fallacious. Under Clause (e) of Section 297(2) the initiation of proceedings for imposition of penalty and the levy of penalty under the Act of 1961 is not with reference to the fact whether the assessment was made under the 1961 Act or the 1922 Act. That apart, in this case, the return having been filed on 19th October, 1961, that is, before the commencement of the 1961 Act, the assessment under the 1922 Act was by virtue of the provisions of Section 297(2)(a) of the Act of 1961. The proceedings for assessment under the Act of 1922 were thus proceedings under the 1961 Act itself.'
6. Mr. Roy sought to repel this contention by drawing my attention to the language of Section 297(2)(a) of the new Act which provides that in cases covered by that subsection, the assessment may be taken and continued as if the new Act had not been passed. Since the assessment, according to Mr. Roy, in this case was continued under the old Act as if the new Act had not been passed, it must follow that those assessment proceedings could not possibly be proceedings under the new Act.
7. In my view, the contention of Mr. Roy should be accepted. The enabling provisions of Section 297(2)(a), as I read them, authorise assessment under the old Act. But the same enabling provisions also introduce a legal fiction, viz., that the new Act has not come into the Statute Book at all. That being the position, I am unable to hold that assessment proceedings which are taken and completed under the old Act by virtue of the enabling provisions of Section 297(2)(a) of the new Act can be said to be proceedings under the new Act within the meaning of Section 271 thereof.
8. With the utmost respect, I am unable to follow the reasonings of their Lordships of the Madhya Pradesh High Court or to agree with them.
9. The next contention of Mr. Gupta was based on a decision of the Supreme Court in the case of Third Income-tax Officer Mangalore v. M. Damodar Bhat, reported in : 71ITR806(SC) . In that case, it was held by their Lordships of the Supreme Court that although Section 156 of the new Act did not apply in terms where the assessment was made under the old Act, it should apply mutatis mutandis in view of the provisions of Section 297(2)(j) of the new Act. Mr. Gupta invited me to follow the same principle and hold that although Section 271 may not apply in terms in the present case, it should be held to be applicable mutatis mutandis even when the assessment proceedings were completed under the old Act.
10. This contention has been dealt with by me in my judgment in the case of Bansidhar Durgadutt v. Income-tax Officer, Matter No. 157 of 1967 (Cal). For the reasons stated therein, I reject this contention of Mr. Gupta.
11. In the result, I hold that in view of my decision in Narendra Sharma's case, Matter No. 213 of 1966 (Cal), this application must succeed. The rule is made absolute. There will be a writ in the nature of Mandamus directing the respondents to forthwith recall, cancel and withdraw the notices dated the 21st April, 1964, the 13th December, 1965 and the 21st December, 1965 and a writ in the nature of Prohibition restraining the respondents from giving any effect to the said notices in any manner whatsoever. The respondents would, however, be at liberty to proceed according to law.
12. There will be no order as to costs. Rule made absolute.