TMI Blog1980 (1) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax as per the provisional assessment can be imposed subsequent to the completion of the final assessment and, in any case, an order imposing penalty has to be preceded by a show cause notice. 3.. For the year 1973-74, a pre-assessment notice dated 20th September, 1973, was served on the petitioner. This was challenged in O.P. No. 3496 of 1973 and an interim order of stay of collection of tax was obtained. The O.P. was dismissed by judgment dated 14th February, 1975. A provisional order of assessment for the year 1973-74 had been served on the petitioner on 18th October, 1973. On 14th April, 1975, the final order of assessment was passed. The tax due as per the final order of assessment was paid in full on 16th January, 1976. Subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax assessed or any other amount due under this Act or any instalment thereof is not paid by any dealer or other person within the time specified therefor in the notice of demand or in the order permitting payment in instalments or within the time allowed for its payment by the appellate or revising authority, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in addition to the amount due, a sum equal to--.........." The liability to pay penalty at the prescribed rate is in addition to and independent of the tax payable by the assessee. Rule 20 allows adjustment after final assessment. This rule reads: "20. Adjustment after final assessment.-After making the final assessment under sub-rule (4) or (5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds any other amount due from him. The adjustment contemplated under rule 20 is without prejudice to the right of the department to demand from the assessee the penalty payable by him in terms of section 23(3) read with rule 31. Rule 31 reads: "31. Mode of payment of penalty.-(1) The penalty payable under subsection (3) of section 23 shall be remitted into the Government treasury or paid by means of crossed cheque or crossed demand draft in favour of the assessing authority concerned either separately or along with the tax. (2) The assessing authority concerned may calculate the penalty payable under sub-section (3) of section 23 from time to time and may issue a notice in form 24. On receipt of the notice the dealer shall pay the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Hindustan Steel Ltd. v. State of Orissa[1970] 25 S.T.C. 211 (S.C.)., Commissioner of Income-tax, West Bengal v. Anwar Ali[1970] 76 I.T.R. 696 (S.C.). and C. A. Abraham v. Income-tax Officer, Kottayam[1961] 41 I.T.R. 425 (S.C.)., this Court stated as follows: "There cannot be any dispute regarding this proposition. But, the question for us to consider is whether these decisions can apply to the case before us. The language of section 23(3) appears to make the payment contemplated by the section an absolute liability on the assessee. If the tax assessed is not paid within the time allowed, whatever be the reason for the non-payment, the dealer or other person shall pay, by way of penalty, in the manner prescribed, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... language of the section: vide Union of India v. J.N. Sinha(1)." 7.. In the light of that decision, the contention that the penalty did not and could not accrue until after due notice was issued to the petitioner has no merit. The mental element of mens rea or wilful default is irrelevant to the question, the liability being absolute. 8.. The petitioner's counsel submits that that decision requires reconsideration. The only reason stated in support of that submission is that this Court read "penalty" as "imposed by way of damages". The reason for so reading the expression is clearly stated; and I see no merit on the criticism against it. 9.. The counsel further submits that at any rate a stay of collection operated during the pendency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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