TMI Blog1982 (9) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 16,700 for non-payment of advance tax of Rs. 3,34,967.63 demanded under s. 210(3) of the Act for the assessment year 1965-66. The imposition of the said penalty was challenged by the assessee before the AAC on various grounds. The AAC, while rejecting all the other grounds, accepted the following two contentions of the assessee: (1) that there was no valid or proper show-cause notice before the actual levy of penalty as contemplated by s. 221(1), proviso, of the Act ; and (2) that in any event the computation of advance tax of Rs. 3,34,967.63 having been made by the ITO in rectification proceedings under s. 154 without giving a show-cause notice as provided under sub-s. (3) of s. 154, the demand for advance tax is itself invalid and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal, the Revenue has obtained this reference on the question set out above. The scope of the question referred to us can be appreciated properly if the facts and circumstances leading to the demand for advance tax under s. 210(3) and the levy of penalty for non-payment of the advance tax under s. 221(1), proviso, are kept in mind. In this case, the ITO originally issued a notice to the appellant on August 21, 1964, under s. 210(1) of the Act demanding payment of the advance tax of Rs. 33,120.50 for the year 1965-66. The said figure of Rs. 33,120.50 was determined on the basis of the assessee's last completed assessment for 1961-62 in which the total income had been computed at Rs. 83,131. On September 2, 1964, the assessee had filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty is invalid on two grounds, viz., (1) that before levying penalty there was no proper show-cause notice issued to the assessee to show-cause why penalty should not be levied for non-payment of advance tax as contemplated by s. 221 (1), proviso, and (2) that the demand for advance tax based on the provisional assessment for the year 1964-65 itself is invalid as the determination of the advance tax has been done by way of rectification without any show-cause notice to the assessee as contemplated by the statute, and therefore, the demand for advance tax with reference to which the levy of penalty has been made is itself invalid, and, therefore, there is no question of any levy of penalty for non-payment of such an advance tax. When th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in holding that the order dated March 26, 1965, imposing a penalty of Rs. 16,700 by the Income-tax Officer under section 221(1) of the Income-tax Act, 1961, was not valid in law for the reason that the proviso to section 221(1) has not been strictly followed ?" The Tribunal, as already stated, has stated that the notice dated March 17, 1965, issued by the ITO is a composite one granting extension of time for payment of advance tax and at the same time calling upon the assessee to show cause why penalty proceedings cannot be initiated for non-payment of advance tax within the time allowed. According to the Tribunal, such an issue of composite notice may not be and is not sufficient compliance with the proviso to s. 221(1). However, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore proceeding to levy penalty. In answer to the show-cause notice, if the assessee shows good and sufficient reason for non-payment of the tax, no penalty shall be levied by the ITO. In this case, as already stated, the ITO issued a notice on March 17, 1965, permitting the assessee to pay the advance tax on or before March 24, 1965. In the same notice, the ITO called upon the assessee to show cause why penalty should not be levied if the advance tax is not paid before March 24, 1965. The purport of the said notice, issued by the ITO, is to extend the time for payment of the advance tax up to March 24, 1965, and for giving an opportunity to the assessee to give good and sufficient reason for non-payment of the advance tax, in which case no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay the advance tax before March 24, 1965, and if the assessee commits default in payment of the advance tax by March 24, 1965, she is in substance given an opportunity to show good and sufficient reason as to why penalty should not be levied, which she can do so by putting forward a good and sufficient reason as to why the default in payment of advance tax was committed. Thus, having regard to the purport of the notice issued on March 17, 1965, we have to hold that it is sufficient compliance with the first proviso to s. 221(1). Section 292B also supports the view we have taken. That section says : " No return of income, assessment, notice) summons or other proceeding furnished or made or issued or taken or purported to have been furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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