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TMI Blog1974 (1) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 High Court in Smt. Kusum Kumari v. Union of India. The facts in the case before the Tribunal were fully covered by the aforesaid decision of the Allahabad High Court. On behalf of the revenue it was contended that the Bench decision was not of the Punjab & Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision 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 of penalty, to pay such amount as the Income-tax Officer may direct, and in the case of a continuing default, such further amount or amounts as the Income-tax Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, 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 assessee in default covered by sub-section (1) of section 201 of the Act is concerned, before a penalty can be imposed, the Income-tax Officer has to be satisfied that the person or the officer has "without good and sufficient reasons failed to deduct and pay the tax ". From this it fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 140A(3), 272 and 273 where it is the Income-tax Officer who has to impose the penalty but under sub-section (1) of section 271 of the Act, penalty can be imposed either by the Income-tax Officer or by the Appellate Assistant Commissioner. This sub-section provides as under : "If t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be deemed to be in default. From this it is clear that it is the Income-tax Officer who has to determine whether a particular person becomes an assessee in default and section 221 only provides for the consequences of the assessee being in default and those consequences are that a penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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