1971 (5) TMI 30 - HC - Income Tax

Failure to file estimates of advance tax for an assessment year prior to 1st April, 1962 - Whether, on the facts and in the circumstances of the case, it could be rightly held that no penalty can be levied on the assessee under section 273(b) of the Act of 1961 for the assessment year under appeal for a default under section 18A(3) of the Act of 1922 ? - Having regard to the foregoing discussion our answer to the question referred to us is that penalty under section 18A(9) can be imposed under section 273(b) of the Income-tax Act, 1961, for the assessment year under appeal before the Tribunal.

Summary

Issues:
Interpretation of section 273(b) of the Income-tax Act, 1961 in relation to penalty imposition for non-payment of advance tax under section 18A(3) of the Indian Income-tax Act, 1922.

Analysis:
The judgment pertains to six references under section 256(1) of the Income-tax Act, 1961, concerning the imposition of penalties on assessees for failure to pay advance tax under section 18A(3) of the Indian Income-tax Act, 1922. The central question was whether penalties under section 273(b) of the 1961 Act could be levied on the assessees for the default under section 18A(3) of the 1922 Act. The assessees contended that no penalty could be imposed under section 273(b, leading to a series of appeals and tribunal decisions in their favor. The court analyzed the provisions of section 273(b) and section 297(2)(g) of the 1961 Act, which saved penalties in certain cases post the repeal of the 1922 Act. The court considered the nexus between penalty imposition and regular assessment, ultimately concluding that penalties could be imposed under section 273(b) for non-compliance with section 18A(3) of the 1922 Act in connection with regular assessments.

The court addressed the argument that penalties under section 18A(9) of the 1922 Act were not related to assessments, citing precedents and legal interpretations. The court emphasized that the imposition of penalties under section 18A(9) was indeed connected to regular assessments, falling within the ambit of section 297(2)(g) of the 1961 Act. The court highlighted the broad interpretation of the phrase "in respect of any assessment for the year" and its relation to penalty imposition, ultimately affirming that penalties could be imposed under section 273(b) for non-compliance with section 18A(3) of the 1922 Act.

Furthermore, the court acknowledged a differing view in a previous case but relied on a Supreme Court decision in Commissioner of Income-tax v. Singh Engineering Works P. Ltd., which supported the imposition of penalties under section 273(b) for non-payment of advance tax under section 18A(3) of the 1922 Act. The court noted that the Supreme Court decision was binding, even though the specific aspect raised by the assessees had not been explicitly addressed. Ultimately, the court held that penalties under section 18A(9) could be imposed under section 273(b) of the Income-tax Act, 1961, for the relevant assessment year, thereby dismissing the contentions raised by the assessees.

In conclusion, the court provided a definitive answer to the question referred, affirming the authority to levy penalties under section 273(b) for non-payment of advance tax under section 18A(3) of the 1922 Act. The judgment highlighted the legal interpretations, precedents, and statutory provisions supporting the imposition of penalties in connection with regular assessments, ultimately settling the dispute raised by the assessees.