TMI Blog1968 (9) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... re not " due by the assessee " on April 23, 1965, when the notice under section 226(3) of the new Act was issued. We are accordingly of the opinion that Mr. Srinivasan is unable to make good his argument on this aspect of the case. It follows, therefore, that the impugned notice dated April 23, 1965, was validly issued as regards items 4 and 5, viz., penalty for the assessment year 1962-63, i.e., ₹ 1,890, and tax for the assessment year 1963-64, i.e., ₹ 64,307.90. In the absence of specific particulars by the respondent in his writ petition, it is not open to the High Court to go into the question whether the Income-tax Officer has arbitrarily exercised his discretion. In the result we hold that the respondent is unable to substantiate his case that the impugned notice is in any way defective with regard to item No. 1 i.e., tax for the assessment year 1960-61 amounting to ₹ 7,056.15. - - - - - Dated:- 6-9-1968 - A. N. GROVER., J. C. SHAH. and V. RAMASWAMY. JUDGMENT The judgment of the court was delivered by RAMASWAMI J.-- This appeal is brought by certificate on behalf of the III Income-tax Officer, Mangalore, from the judgment of the Mysore Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at nine per cent. per annum from the day commencing after the end of the period mentioned in sub-section (1) (4) If the amount is not paid within the time limited under sub-section (1) or extended under sub-section (3), as the case may be, at the place and to the person mentioned in the said notice the assessee shall be deemed to be in default... (6) Where an assessee has presented an appeal under section 246 the Income-tax Officer may, in his discretion, and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of. . . 221 Penalty Payable when tax in default --(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable to pay by way of penalty, an amount which, in the case of a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that amount. (ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and, for the purposes of this sub-section, the shares of the joint-holders in such account shall be presumed, until the contrary is proved, to be equal. (iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Income-tax Officer, and in the case of a joint account to all the joint-holders at their last addresses known to the Income-tax Officer. (iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made notwithstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation to which a notice under this sub-section has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed ; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid ; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." As regards the second item in the impugned notice, viz., tax in respect of assessment year 1961-62 to the extent of Rs. 485.55, the material facts are as follows : The assessment proceedings were taken and concluded under the old Act and tax of Rs. 2,947.56 was imposed and demanded. Thereafter, the respondent preferred an appeal to the Appellate Assistant Commissioner. In appeal the tax liability was reduced to Rs. 485.55. Thereupon the Income-tax Officer issued a notice to the respondent dated December 11, 1963, purporting to be under section 156 of the new Act. The limit of 35 days for payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Act, therefore, it is not necessary that the assessee should be in default or should be deemed to be in default and no such condition or limitation is imposed by the language of that sub-section. We are accordingly of the opinion that the Income-tax Officer had authority to issue the notice dated December 11, 1963, under section 156 of the new Act with respect to the tax liability of Rs. 485.55 incurred by the respondent under the old Act. The High Court has expressed the view that " in the case of an assessment under the old Act no notice under section 156 of the new Act was possible ", and " there was no way of taking advantage of the provisions for recovery and collection of tax contained in sections 220 to 234 of the new Act ". The High Court has based its opinion on the premise that all recoveries are possible " only when the stage mentioned in section 220(4) was reached, namely, that the assessee had become or deemed to have been an assessee in default " and the action under section 226 could be taken only when an assessee was in default. In our opinion, the reasoning adopted by the High Court and the conclusion reached by it is not correct in law. The effect of the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th before that date. As the tax and penalty covered by the notice were not due till May 21, 1965, it was said that notice of attachment under section 226(3) of the new Act could not legally be issued on April 23, 1965. In our, opinion, there is no warrant for this argument. As we have already observed, there is nothing in the language of section 226(3) of the new Act to suggest that the assessee must be in default before a notice under that sub-section could be issued. It is true that section 220 of the new Act deals with the question as to when the tax is payable and when the assessee is deemed to be in default but so far as section 226(3) of the new Act is concerned, the question of any default of the assessee is irrelevant. It was argued by Mr. Srinivasan on behalf of the respondent that the amount of tax must be " due to be paid " by the assessee before a notice can be issued under section 226(3) of the new Act. It is not disputed in this case that the notices of demand under section 156 of the new Act were served on the respondent before the issue of the notice under section 226(3) of the new Act. As pointed out by this court in Kesoram Industries Cotton Mills Ltd. v. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c particulars in support of his case that the Income-tax Officer has exercised his discretion in an arbitary manner. In paragraph 12(b) of the writ petition the respondent had merely said that the order of the Income-tax Officer made under section 220 was arbitrary and capricious ". No other particulars were given by the respondent in his writ petition to show in what way the order was arbitrary or capricious. In the counter-affidavit the allegations of the respondent have been denied in this respect. We are of opinion that, in the absence of specific particulars by the respondent in his writ petition, it is not open to the High Court to go into the question whether the Income-tax Officer has arbitrarily exercised his discretion. In the result we hold that the respondent is unable to substantiate his case that the impugned notice is in any way defective with regard to item No. 1 i.e., tax for the assessment year 1960-61 amounting to Rs. 7,056.15. For the reasons expressed, we set aside the judgment of the Mysore High Court dated February 1, 1967, and order that Writ Petition No. 846 of 1965 filed by the respondent should be dismissed. We accordingly allow this appeal with costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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