9911796707
|
Home
Issues: Penalty imposition under the Income-tax Act of 1961 for defaults under the Act of 1922; Validity of penalty levy under section 271(1)(a) of the Income-tax Act of 1961; Consideration of default period prior to April 1, 1962, for fixing the penalty amount.
Analysis: The case involved two partners of a firm who were not served with a notice under section 22(2) of the Indian Income-tax Act of 1922 but did not comply with the requirements of a public notice issued under section 22(1) of the Act. The Income-tax Officer issued a notice under section 148 of the Income-tax Act of 1961 for reassessment, and penalties were levied for both assessment years. The Appellate Assistant Commissioner canceled the penalties but suggested a reduced penalty amount if applicable. The Tribunal upheld the penalty levy under the new Act, considering the default period from when the returns were due under the public notice of the Act of 1922. The questions referred included the validity of penalty imposition under section 271(1)(a) of the Income-tax Act of 1961 and the consideration of the default period prior to April 1, 1962. The High Court analyzed the applicability of section 297(2)(d)(ii) of the Act of 1961 to reassessment proceedings under section 147, which includes the provisions of section 271 of the Act of 1961. Referring to the Supreme Court decision in Jain Brothers v. Union of India, the Court affirmed that penalties could be levied under the Act of 1961 for defaults preceding 1962-63. The Court rejected the argument that default prior to the initiation of reassessment proceedings would be wiped out, citing a previous case where penalty for not responding to a public notice under section 22(1) could be imposed even during reassessment proceedings under the Act of 1922. Furthermore, the Court distinguished a case cited by the assessees, Addl. Commissioner of Income-tax v. Bihar Textiles, emphasizing the different circumstances in the present case. The Court held that the levy of penalty under section 271(1)(a) was valid for the default of not responding to the public notice under section 22(1) of the Act of 1922. It was noted that the assessees could have sought an extension if unable to comply with the public notice, and failure to do so constituted a default justifying penalty under the relevant provisions. Lastly, the Court addressed the assessees' argument for waiving the penalty under the Act of 1961 due to their belief that no penalty could be levied for earlier years. The Court acknowledged the assessees' genuine contention based on previous decisions but emphasized that the Supreme Court's ruling now rendered their argument invalid. The Court suggested that the assessees could have approached the authorities for waiver if they had not held the belief that no penalty could be imposed under the Act of 1961 for earlier years. Consequently, the Court ruled in favor of the department, indicating that the assessees would bear the costs.
|
