TMI Blog1969 (6) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... tension but informed the assessee that there would be no further extensions. On the 16th January, 1961, the assessee was served with a notice under section 23(3). Then, on the 17th January, 1961, the assessee filed its return for the assessment year 1960-61. The Income-tax Officer, however, took more than two years to complete the assessment. The assessment was made on October 31, 1962, after the commencement of the Income-tax Act, 1961. Under the provisions of section 297(2)(g) of the 1961 Act the proceedings for imposition of penalty had to be initiated and completed (sic). That is why the assessee was served with a fresh notice under section 274(1) of the 1961 Act. In response to the show-cause notice, the assessee took a preliminary objections The assessee contended that the notice under section 274(1) was issued on the 15th May, 1963, that is, after the completion of the assessment proceedings. The notice, therefore, was invalid and no penalty proceedings could be initiated, The Income-tax Officer rejected this contention. The assessee also submitted that its-audited balance-sheet, owing to the absence of its accountant, was ready only in October, 1960, In these premises, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the tax liability. The Tribunal, accordingly, reduced the penalty to Rs. 2,737. The following question of law has been referred to this court: " 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)(i) of the Income-tax Act, 1961, the amount paid by the assessee under the provisional assessment under section 23B of the Indian Incme-tax Act, 1922, was to be deducted from the amount of tax determined under section 23(3) of that Act in order to determine the amount of tax on which the computation of penalty was to be based and in reducing the amount of the penalty imposed on the assessee to Rs. 2,737 ? " The relevant provisions of section 271 of the 1961 Act are as follows : " 271. Failure to furnish returns, comply with notices, concealment of income, etc.-(1) 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 under subsection (1) of section 139 or by notice giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d before the assessment order is made, a penalty under that section may be imposed on a date subsequent to the date of the assessment order and even after the income tax assessed has been paid by the assessee. The word " payable " in the latter portion of the section means, according to the Lahore High Court, " to which he has been assessed ", whether the amount has been paid or not. In Income-tax Officer, "A" Ward, Agra v. Firm Madan Mohan Damma Mal the Allahabad High. Court has observed as follows : "All that was provided under section 28 of the Income-tax Act, 1922, was that in certain cases, the assessee was liable to pay, something more in addition to the tax already assessed. Formerly, there was no separate chapter dealing with penalties but in the Act of 1961, Chapter XXI has been separately provided dealing with penalties alone and under the new scheme it was necessary that section 297. of the Act should provide definitely and separately for the procedure to be followed in penalty matters and, therefore, clauses (f) and (g) separately deal with the question of penalty and it cannot be said that the matter of penalty is also by necessary implication included within clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in addition to the amount of " tax payable ". But in the latter part the legislature, instead of using the words " tax payable " has merely used the word " tax ". It may, therefore, be contended that in this particular clause the expressions "tax payable" and "the tax" mean one and the same thing. In other words, wherever the expression "the tax" appears it should be understood to meat). "the tax payable". The result would be that, unless on the day penalty is being imposed some amount of tax remains outstanding or payable by the assessee, no penalty can be imposed at all. This means that penalty is to be calculated with reference to the actual amount due and payable by the assessee on the date of imposition of the penalty. And from this point of view the Tribunal, in the instant reference, has come to the correct conclusions. As against the latter construction, Mr. Sen Gupta for the Commissioner has placed for our consideration two other provisions of the Act of 1961. In section 2(43) "tax" has been defined. It says : " 'tax' means income-tax and super-tax chargeable under the provisions of the Act ". It should be remembered that this definition is to be followed "unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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