TMI Blog1978 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1942-43 2. " 153 of 1976 " " 1943-44 3. " 151 of 1976 " " 1944-45 4. " 150 of 1976 " " 1945-46 5. " 148 of 1976 " " 1946-47 6. " 152 of 1976 " " 1947-48 The ITO by his order assessed the non-applicant in the status of an unregistered firm as non-resident and as large sums were due to be paid by the non-applicant and the same were not paid within the time limit allowed by notice under s. 156 of the I.T. Act, 1961 (hereinafter referred to as "the Act") the ITO issued a notice under s. 221(1) of the said Act to M/s. Kalyanmal Mills Ltd., Indore, which is one of the partners of the non-applicant. However, the said mills did not care to reply in spite of opportunities. The ITO, therefore, held that the non-applicant was a defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d April 18, 1972, refused to make a reference to this court on the ground that no question of law arises out of its order. It appears, therefore, that the present petitions have been filed by the petitioner under s. 256(2) of the Act for direction to the Tribunal to state the case and refer the question. Learned counsel appearing for the petitioner contended that the Tribunal felt that as ultimately on appeal the Tribunal found that there was no liability to pay tax it took the view that for non-payment of tax in time there was sufficient reason as according to the Tribunal the liability to pay tax was a matter depending on a controversial question. This, according to learned counsel, was not justified as the second proviso to s. 221(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal could hold that this was a sufficient reason for non-payment of tax and the Tribunal was within its jurisdiction to say that no penalty could be imposed in such a case. It was also contended that whether a set of facts afforded a reasonable cause to the assessee for non-payment of tax is always a question of fact and the Tribunal could not be directed in this petition to make a reference to this court on this question. Section 221(1) of the Act runs : "221. (1) 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . State of Orissa [1972] 83 ITR 26, their Lordships of the Supreme Court observed : "But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions on this question. Reference may be made to the decisions in Ravula Hariprasada Rao v. State, AIR 1951 SC 204, and in State of Maharashtra v. Mayer Hans George [1965] 35 Comp Cas 557 ; AIR 1965 SC 722. Their Lordships further considering the various decisions ultimately held : "Section 221, as it stands amended by the Taxation Laws (Amendment) Act, 1970, has a proviso which restricts the power of the Income-tax Officer to impose penalty under the section unless he is satisfied that the default was for good and sufficient reasons. It is easy to see in the light of the proviso that Parliament did not intend to create an absolute offence under section 221 (1). At the relevant time there was no proviso in the section as it stood. If t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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