TMI Blog1972 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year in this case is 1958-59 for which the relevant accounting year is the financial year ending on the 31st of March, 1958. The assessee is a registered firm on which a penalty of Rs. 1,21,112.70 was levied under section 271(1)(a) of the Income-tax Act, 1961, hereinafter referred to as the new Act. The return was due on July 23, 1958, but the same was filed on February 13, 1961, that is, roughly after a delay of 31 months. The Income-tax Officer applying the provisions of section 271(1)(a) of the new Act calculated the penalty leviable at 2 per cent. of the tax for each month of default. That figure would come to Rs. 1,49,000 and odd which would have been in excess of 50 per cent. of the tax. The Income-tax Officer accordingly restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1)(a) of the new Act. This notice was issued much after the completion of the assessment and was served on the assessee on February 17, 1964. The Tribunal, therefore, observed that notwithstanding the absence of a reasonable cause for the delay in filing the return, the commencement of the proceedings for penalty was not in accordance with the provisions of section 275 of the new Act ; whereas the assessment proceedings were completed on March 20, 1963, the proceedings for penalty were started long after that date. There was, therefore, no valid commencement of the proceedings for penalty, and consequently, the order of penalty could not be sustained. On behalf of the income-tax department it was argued that the notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by a notice under section 274 of the new Act. In two recent decisions of the Punjab and Haryana High Court and the High Court of Allahabad this question has been considered. In Commissioner of Income-tax v. Bipan Lal Kuthiala, a Bench consisting of Prem Chand Pandit and S. S. Sandhawalia JJ. decided that a notice under section 28(3) of the old Act could be deemed to have been issued under the corresponding provision of the new Act and the imposition of penalty was valid. In Commissioner of Income-tax v. Bankey Lal Hira Lal (I.T.R. No. 592 of 1968 decided on 23-12-1971), a Division Bench of Allahabad High Court dealt with a similar question. That was a case where the Income-tax Officer recorded in the assessment order that " question f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clauses (a), (b) or (c) before the proceedings are concluded. The proceeding to levy penalty has, however, not to be commenced by the Income-tax Officer before the completion of the assessment proceedings by the Income-tax Officer. Satisfaction before completion of the proceedings under the Act, and not the issue of a notice or initiation of any step for imposing penalty, is a condition for the exercise of the jurisdiction. " In Kishanlal v. Commissioner of Income-tax, a Division Bench of the Madhya Pradesh High Court held that an assessee is liable to penalty under section 271(1) of the new Act for his defaults referred to in section 28(1) of the old Act in respect of any assessment for the year ending on 31st March, 1961, or any earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (j) of the new Act. According to that decision, in a case falling within that section, in a proceeding for recovery of tax and penalty imposed under the Act of 1922, it is not required that all the sections of the new Act relating to recovery or collection should be literally applied, but only such of the sections will apply as are appropriate in the particular case and subject, if necessary to suitable modifications. In other words, the procedure of the new Act will apply to cases contemplated by section 297(2)(j) of the new Act mutatis mutandis. Similarly, the provisions of section 271 of the Act of 1961 will apply mutatis mutandis to proceedings relating to penalty initiated in accordance with section 297(2)(g) of that Act. Shri G. C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28, 1964. The explanation offered by the assessee was not found tenable. Not only did the assessee not file the return in time but it also failed to do so despite several reminders. It is well settled that a return can always be filed at any time before the assessment is made and since in the present case the assessment was completed on March 20, 1963, it could not be held that there was delay in filing the return. He relied upon a decision of the Supreme Court in Commissioner of Income-tax v. Kulu Valley Transport Co. P. Ltd. That case has, however, nothing to do with the question arising for decision in the present case. The only question involved in that case was with regard to the loss returns filed by the assessee and their conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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