TMI Blog1974 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... w. The Income-tax Officer had imposed penalties in different amounts against these assessees under sub-section (1) of section 221 of the income-tax Act, 1961, (hereinafter referred to as " the Act "). The Appellate Assistant Commissioner upheld the penalties as levied by the Income-tax Officer. In the appeal filed before the Income-tax Appellate Tribunal (hereinafter referred to as " the Tribunal "), the contention of the assessees was that no penalty could be imposed by the Income-tax Officer under section 221 of the Act, in the circumstances of the case, because this section does not specifically mention that it is the Income-tax Officer who is to impose the penalty. For this contention he relied upon a Bench decision of the Allahabad H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was relied upon by the assessee and on the basis of which the decision was given by the Tribunal, has since been reversed by a Full Bench of the Allahabad High Court in D. C. Puliani v. Commissioner of Income-tax. We have carefully gone through the Full Bench decision and also heard the learned counsel for the respondents and we may say, with respect, that the decision of the Full Bench is correct and is fully applicable to the present case. Sub-section (1) of section 221 of the Act runs as follows : " When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax. " This sub-section, therefore, defines one type of "assessee in default ". There is a proviso added to this sub-section which runs as follows : " Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Income-tax Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. " Thus it is clear that, so far as an assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order ". Clause (1) relates to an order under section 201 and clause (o), sub-clause (ia), relates to an order under section 221. Reading sections 246 and 221, the inference is irresistible that the intention of the legislature was that the Income-tax Officer was to impose penalty under section 221. This is exactly the line of reasoning followed by the Full Bench of the Allahabad High Court in D. C. Puliani's case. We feel that this is the correct interpretation. The learned counsel also referred us to the various other provisions under which penalties could be imposed and he brought to our notice sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner " who can impose the penalty. This section also does not advance the case of the learned counsel for the respondents any further. As was observed by the Full Bench of the Allahabad High Court, section 220 of the Act provides the circumstances under which an assessee can be deemed to be in default. According to the proviso to sub-section (1) of section 220, an Income-tax Officer can reduce the period within which the notice of demand is to be complied with by payment of the tax. Sub-section (3) of this section provides that the Income-tax Officer may extend the time and sub-section (4) provides that if the amount is not paid within the time limited under sub-section (1) or extended under sub-section (3), the assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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