TMI Blog1976 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings on August 17, 1960, could be completed after the reassessment was made on October 25, 1962 ? (2) Whether, on the facts and in the circumstances of the case, and on a proper interpretation of section 28(1)(a) the Income-tax Officer could levy penalty, (a) after the original assessment in which the default arose was made ; or (b) after the Appellate Assistant Commissioner disposed of the appeal against the original assessment ? " The reference relates to the assessment year 1959-60 and the questions referred are in relation to penalty under section 28(1)(a) of the Indian Income-tax Act, 1922. On the 8th July, 1959, notice was served under section 22(2) of the Indian Income-tax Act, 1922. Thereafter, on the 15th March, 1960, remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as further submitted that penalty should have been levied before the 19th March, 1960, when assessment was completed. The Appellate Assistant Commissioner rejected the said contention and upheld the order of the Income-tax Officer. There was a further appeal to the Tribunal. Before the Tribunal it was urged that assessment having been reopened under section 34(1)(a) the Income-tax Officer could not subsequently penalise for default, if any, in submitting the return to the original assessment proceedings. It was urged that penalty being in the nature of additional tax should have been levied simultaneously with assessment and inasmuch as the assessment order being dated 19th September, 1960, was no longer in existence, there could not be any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of C. A. Abraham v. Income-tax Officer [1961] 41 ITR 425 (SC), but in the scheme of the Act, the proceedings for imposition of penalty, though emanating from proceedings of assessment, are independent and separate aspects of the proceedings. Separate provision is made for the machinery for imposition of penalty being (sic) the order for imposition of penalty. Under sub-section (6) of section 28 it is provided that no penalty shall be imposed without the previous approval of the Inspecting Assistant Commissioner. Under section 29 of the old Act as well as section 156 of the new Act, notice of demand stipulates separately both penalty and sum assessed as different sums payable under the said notice of demand. It has further to be noted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been avoided if the income returned by the person had been accepted as the correct one. It was contended that the legislature had not indicated as to of what sum it should be one and a half times more, whether it should be a sum payable as a result of the original assessment or a sum payable as a result of the reassessment. It was contended that in this case the original assessment was reopened and after the original assessment was reopened there was a fresh reassessment and a fresh reassessment order has been passed. Therefore, the sum payable was a different sum than the sum which was payable under the original assessment. It was further contended that in the event there was no offence committed in respect of the reassessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of Commissioner of Income-tax v. Angara Satyam [1959] 37 ITR 230 (AP). Reliance may also be placed on the decision of the Full Bench of the Allahabad High Court in the case of Commissioner of Income-tax v. Gopal Krishna Singhania [1973] 89 ITR 27 (All) [FB]. Counsel for the assessee, however, contended that in a case where penalty was being levied under the provision of section 28(1)(a) it was a situation which was different from where the penalty was being levied in respect of the situation contemplated by clauses (b) and (c) of sub-section (1) of section 28. It was contended that in the cases of sub-clauses (b) and (c), the section required that there should be, in addition, an imposition of tax which would not be exceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original order of assessment had gone and as such no sum of tax was payable. Accordingly, the counsel for the assessee contended that, as there was no sum payable by the assessee, there could not be any question of imposition of penalty which could be an addition of one and a half times of the tax payable. Counsel then submitted that if there were two constructions possible in a matter of a provision like this, one which is more favourable to the assessee and the citizen should be adhered to in preference to the other. While, for the purpose of disposing of this case, we assume the second proposition to be correct and it is not necessary for us to decide this controversy, it, however, appears to us that it cannot be said that in this case n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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