9911796707
TMI Blog1974 (1) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... r for the assessment years 1963-64 and 1964-65, before respondent No. 2, Additional Commissioner of Income-tax, West Bengal II. The said disclosure was accepted by the Commissioner of Income-tax with slight modification of the amount disclosed and on receipt of the said information, the Income-tax Officer served upon the petitioner a demand notice under section 156 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), on January 13, 1966, for Rs. 4,12,677.80 requiring the petitioner to pay the whole of the aforesaid amount within 35 days of the service of the said notice. The petitioner paid Rs. 41,267 being 10 per cent. of the total demand and made a written prayer on January 17, 1965, for paying the balance by instalments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 1970. By an order dated March 3, 1971, the Additional Commissioner of Income-tax, West Bengal II, rejected the petitioner's said application. The said order was communicated to the petitioner by a letter, dated March 24, 1971. Thereafter, the petitioner received a notice dated April 2, 1971, issued under section 221(1) of the Act by the Income-tax Officer, whereby the said Income-tax Officer asked the petitioner to show cause why a penalty should not be levied under the said section for not paying the said amount of interest amounting to Rs. 44,463 under sections 220(3) of the Act. The petitioner being aggrieved by the said notice of demand dated November 25, 1970, passed under section 220(2) of the Act, the order of the Additional Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are fulfilled, the Income-tax Officer has no authority to grant any instalment to the assessee under sub-section (3) of section 220 of the Act. There is no provision in the Finance (No. 2) Act of 1965 by which the power has been conferred upon the Commissioner of Income-tax to grant any instalment, but by virtue of the deeming clause as provided in the proviso to sub-section (7)(a) of section 24 of the Finance (No. 2) Act of 1965, the Income-tax Officer shall be deemed to authorise to extend the time limit for payment of the tax due or allowing payment in instalments unless the conditions laid down in the said proviso are fulfilled. It is not disputed in the instant case that the entire amount specified in the demand notice under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m specifying the sum so payable. " I have already found that interest is payable under sub-section (2) of section 220 of the Act with respect to any disclosure made under Finance (No. 2) Act of 1965 and in the instant case an order under sub-section (2) of section 220 of the Act had been passed by the Income-tax Officer on November 25, 1970, which is annexure " D " to the petition. When interest is payable in consequence of an order passed under the Act, the provisions of section 156 of the Act are automatically attracted and for that reason no further reference to section 156 has been made in the Finance (No. 2) Act of 1965, for issuing any demand notice for payment of interest. Lastly, Mr. Pal contended that the Income-tax Officer has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that it is to be treated as tax, and it thus retains its character of interest but it is recoverable along with the tax. Indeed section 29 of the Indian Income-tax Act, 1922, makes a distinction between penalty and interest. In another decision, P. S. Subramanyan, Income-tax Officer v. Simplex Mills Ltd., the Supreme Court held that penal interest chargeable under the provisions of the Income-tax Act was not a tax payable by the assessee. Therefore, in view of the above two decisions of the Supreme Court, " tax " and " interest " are different and distinct in character. Under sub-section (1) of section 221 of the Act, penalty can be imposed only when the assessee is in default in making payment of tax. The words used in sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961, has been paid in full. It is true, that the petitioner is liable to pay interest and, unless he pays the interest, he is not entitled to get the certificate as provided under sub-section (15) of section 24 of the Finance (No. 2) Act of 1965. But the point for determination is whether for non-payment of interest penalty could be imposed under sub-section (1) of section 221 of the Act. In my view as "tax" has been defined under clause (43) of section 2 of the Act, there is no scope for any argument that " interest " is an " additional tax ". Accordingly. I hold that no penalty can be imposed for default in payment of interest under sub-section (1) of section 221 of the Act. In the result, this rule is made absolute in part. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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