TMI Blog1973 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... , K. S. HEGDE. and P. JAGANMOHAN REDDY. JUDGMENT The judgment of the court was delivered by HEGDE J.-- This appeal by certificate arises from the decision of the Calcutta High Court in a case stated by the Income-tax Appellate Tribunal, " B " Bench, Calcutta. After setting out the relevant facts, the Tribunal solicited the opinion of the High Court on the following question of law : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in calculating the penalty leviable under section 271(1)(a)(i) of the Income-tax Act, 1961, the amount paid by the assessee under the provisional assessment under section 23B of the Indian Income-tax Act, 1922, was to be deducted from the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessment was completed by the Income-tax Officer only on October 31, 1962. Meanwhile, on April 1, 1962, the Income-tax Act, 1961 (to be hereinafter referred to as the " Act "), came into force. As under the provisions of section 297(2)(g) of the Act, the proceedings for the imposition of the penalty had to be initiated and completed under the Act, a fresh notice under section 274(1) of the Act was served on the assessee. The assessee objected to the validity of the notice but that objection was overruled. At present we are not concerned with that objection. We are also not concerned with the other objections taken by the assessee which were negatived by the Tribunal. The Income-tax Officer determined the tax due from the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n placed by him, Mr. Manchanda relied on the decisions of the Lahore High Court in Vir Bhan Bansi Lal v. Commissioner of Income-tax and the decision of the Delhi High Court in Commissioner of Income-tax v. Hindustan Industrial Corporation. The Delhi High Court followed the decision of the Lahore High Court. On the other hand, it was urged by Mr. B. Sen, learned counsel for the assessee, and Mr. S. V. Gupte, learned counsel for the interveners, that on a proper interpretation of the provision mentioned earlier, it would be clear that the penalty can be only imposed on the amount payable under section 156. In support of their contention, they relied on the decision of the Mysore High Court in M. M. Annaiah v. Commissioner of Income-tax. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs than one, then we have to adopt that interpretation which favours the assessee, more particularly so because the provision relates to imposition of penalty. Let us now read section 271(1)(a)(i). The section, to the extent material for our present purpose, reads : " If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person--- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish...... by notice given under sub-section (2) of section 139...... or has without reasonable cause failed to furnish it within the time allowed and in the manner required...... by such notice...... he may direct that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 271(1)(a)(i) refers to the tax payable under a demand notice. We next come to the question what is the meaning to be attached to the words " the tax " found in the latter part of that provision. It may be noted that the expression used is not " tax " but " the tax ". The definite article " the " must have reference to something said earlier. It can only refer to the tax, if any, payable by the assessee mentioned in the first part of section 271(1)(a)(i). It is true the expression " tax " is defined in section 2(43) thus : " 'tax' in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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