1974 (11) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Legality and validity of the levy and demand of penalty u/s 273(b) of the 1961 Act based on reassessment u/s 34 of the 1922 Act after giving deduction for penalty levied u/s 18A(9) of the 1922 Act.

Summary:

Issue 1: Legality and Validity of Penalty u/s 273(b) of the 1961 Act Based on Reassessment u/s 34 of the 1922 Act
The High Court of Patna addressed the question of whether the levy and demand of penalty u/s 273(b) of the 1961 Act, based on reassessment u/s 34 of the 1922 Act, after deducting the penalty levied u/s 18A(9) of the 1922 Act, is legal and valid. The relevant facts of the two tax cases involved the assessees being penalized twice for the same default of not filing an estimate of income u/s 18A(3) of the 1922 Act, once during the original assessment and again during the reassessment.

The Appellate Assistant Commissioner and the Tribunal had accepted the contention of the assessees that the rule of double jeopardy applied, preventing them from being penalized twice for the same offence. However, the High Court clarified that the rule of double jeopardy applies to criminal cases and not to penalties under taxation statutes.

The Court examined the provisions of the 1922 Act and the 1961 Act, noting that penalties for non-furnishing of the estimate of advance tax can only be imposed in connection with regular assessments under section 23 of the 1922 Act or sections 143 or 144 of the 1961 Act. Since reassessment u/s 34 of the 1922 Act or u/s 147 of the 1961 Act is not considered a regular assessment, no penalty can be imposed for non-furnishing of an estimate of advance tax in such cases.

The Court referenced the Kerala High Court decision in Gates Foam & Rubber Co. v. Commissioner of Income-tax and distinguished the Supreme Court decision in N. A. Malbary and Bros. v. Commissioner of Income-tax, noting that the latter involved penalties under section 28(3) of the 1922 Act, which has a different scope.

Conclusion:
The High Court answered the question in the negative, ruling in favor of the assessees and against the revenue, stating that the levy and demand of penalty u/s 273(b) of the 1961 Act based on reassessment u/s 34 of the 1922 Act is not legal and valid. There was no order as to costs since the assessees did not appear in the references.

Separate Judgment:
S. K. Jha J. concurred with the judgment.