1973 (8) TMI 37 - HC - Income Tax

Summary

Issues:
1. Whether penalty could be imposed under section 273(b) of the Income-tax Act, 1961, for default under section 18A(3) of the Income-tax Act, 1922?

Detailed Analysis:
The High Court of Rajasthan was presented with a question regarding the imposition of penalties under the Income-tax Act, 1961, for defaults under the Income-tax Act, 1922. The case involved two Hindu undivided families resulting from a partial partition. The assessees failed to comply with the provisions of section 18A(3) of the old Act by not submitting the estimate of advance tax before the due date. Penalties were imposed by the Income-tax Officer, which were partially reduced on appeal. The assessees challenged the penalties before the Tribunal on the grounds that the new Act's provisions did not apply to the relevant assessment years and that the defaults were minor. The Tribunal, relying on various precedents, found that the penalties imposed were not justified and should be refunded. The Commissioner of Income-tax then approached the High Court, seeking a decision on the matter.

The High Court considered the conflicting judicial opinions on the issue but noted that the Supreme Court had authoritatively resolved similar matters in other cases. Referring to the decisions in Jain Brothers v. Union of India and Commissioner of Income-tax v. Singh Engineering Works P. Ltd., the High Court highlighted that penal provisions of the new Act applied to assessments completed after a certain date. The Supreme Court clarified that penalties could be imposed under the new Act for defaults made under the old Act, provided the assessments were completed after the new Act came into force. The High Court emphasized that the crucial date for penalty imposition was the completion of assessment. The Court also noted that previous decisions by the Tribunal were overruled by the Supreme Court in light of the new interpretations.

In light of the Supreme Court's authoritative decisions, the High Court held that penalties could indeed be imposed under section 273(b) of the Income-tax Act, 1961, for defaults under section 18A(3) of the Income-tax Act, 1922. The Court rejected the Tribunal's findings and ruled in favor of the revenue department. The High Court's decision was based on the clear provisions of the law and the applicability of penalties under the new Act to assessments completed after a specified date. No costs were awarded in the case.