TMI Blog1953 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... 's appeals against that imposition were successively dismissed by the Appellate Assistant Commissioner and the Appellate Tribunal. The grounds of appeal before the Appellate Tribunal appear to have been all grounds of fact. In the course of the argument, however, a point appears to have been taken that Section 28 of the Income-tax Act was not applicable to a registered firm at all, because a person , as contemplated by Section 2(9) of the Act, was a physical person and not a notional person like a firm. The Appellate Tribunal rejected that argument the view that the word person , as defined in the Act, was not limited to physical persons but comprised persons of other kinds as well and, particularly with regard to registered firms, it pointed out that in clause (d) of the proviso to Section 28 itself, a specific reference had been made to a registered firm as a person liable to penalty. Thereupon the assessee required the Tribunal to refer to this Court certain questions of law, including the question as to the liability of a registered firm to penalty. That application, as I have already stated, was rejected. The assessee next moved this Court under Section 66(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid elsewhere, once this Court directs a case to be stated with reference to a particular question, it must be deemed to have held that the question did arise out of the appellate order and thereafter it cannot be open to the Bench finally hearing the reference to throw it out on the preliminary ground that the question did not arise at all. It is therefore necessary to consider the assessee's contention on its merits. The contention urged by Dr. Sen Gupta was simple. He referred to the terms of the charging section, viz., Section 28(1), and contended that, under that section, no one was liable to pay a penalty unless he was also liable to pay income-tax and it might also be super-tax. Since a registered firm was not itself assessed and since no income-tax or super-tax was payable by the firm itself, it followed, according to Dr. Sen Gupta, that no penalty could be charged on or levied from a registered firm. He did not overlook the fact that an attempt had been made by the Amendment Act of 1949 to remove the difficulty created by the concluding paragraph of Section 28(1), but in his submission, the amendment made by way of inserting a new clause viz., clause (d), in the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 23(5)(b) as a registered firm so that the amount of the income-tax and super-tax payable by the firm itself has not been determined, that amount shall be taken to be an amount equal to the tax which would have been payable by an unregistered firm on an income equal to the firm's total income and etc. Dr. Sen Gupta's argument was that although the effect of this new clause, added to the proviso, was to equate an unregistered firm with a registered firm the equation did not proceed beyond the amount of penalty payable. In other words, the clause only laid down a rule of computation. It, however, failed to do the one thing needful which was to make the amount so computed payable by the registered firm. In support of his contention, Dr. Sen Gupta referred to the decision of the Bombay High Court in the case of Commissioner of Income-tax, (Central) Bombay v. Nazir and Sons, Bombay [1949] 17 I.T.R. 486 , particularly for an exposition of the concluding paragraph of Section 28(1), because his argument was that in spite of the addition of clause (d) in the proviso to the section the position created by the concluding paragraph of Section 28(1) had remained unaffected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on itself creating a liability for a penalty in the case of persons who might be found to have no assessable income. Alternatively he argued that the proviso was considered necessary precisely for the reason that but for it a person having no assessable income and no income-tax to pay could not be made liable for a penalty at all because of the concluding paragraph of section 28(1). In my opinion, there is no reason, apart from the provisions of the concluding paragraph of Section 28(1), on which Dr. Sen Gupta relied, to think that an assessee under the Income-tax Act cannot be made liable for a penalty even if he has committed one or other of the defaults, in case he is ultimately found to have no assessable income. The words if any in the concluding paragraph of Section 28(1) appear to me clearly to qualify not merely super-tax but the liability to tax itself. It is noticeable that the present case is one under clause (b) of Section 28(1) and the concluding paragraph of the section, when it refers to cases coming under clause (b) and (c), speaks of any tax payable by him and not of the amount of the income-tax and super- tax, if any , payable by him as it does when it ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the amount of income-tax payable. Since there could be no income-tax or super-tax payable be a registered firm the quantum of a penalty leviable for such a firm could not be determined and it is that omission which has now been made good by clause (d) of the proviso. In fact, it appears to me that so far as penalties imposed in cases coming under clauses (b) and (c) of Section 28(1) are concerned, it was not even necessary to make a new provision for the quantum because the amount of penalty prescribed by the latter part of sub-section (1) for such cases does not depend upon the income-tax or super-tax payable by the person in default, but depends upon the tax, if any, which could have been avoided if the income returned had been accepted as the correct income. That language does not contain any reference to any income-tax payable by any particular person or the persons concerned but refers only to the amount of the income returned and the tax payable on it as a matter of computation. Fort the reasons I have given above, it appears to me that it is not correct to say that under the concluding paragraph of Section 28(1) a registered firm cannot be charged to a penalty, because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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