1970 (8) TMI 13 - HC - Income Tax

Assessee-company was provisionally assessed for the year 1956-57 under section 23B - notice to the assessee for default u/s 18A(9)(b) on the ground that the assessee had failed to furnish an estimate as required u/s 18A(3) - penalty u/s 18A(9)(b) - person who has been provisionally assessed is not a person who had not hitherto been assessed - therefore he is not liable to submit and estimate u/s 18A(3) - penalty not imposable

Summary

Issues:
1. Interpretation of section 18A(3) of the Indian Income-tax Act, 1922 regarding the requirement to furnish an estimate of tax payable.
2. Whether a provisional assessment under section 23B places an assessee in the category of persons 'hitherto assessed' for the purpose of section 18A(3) and exempts them from filing an estimate.

Detailed Analysis:
The judgment delivered by the High Court of ALLAHABAD pertained to a reference under section 66 of the Indian Income-tax Act, 1922, involving an assessee, Messrs. Motor General Sales (P.) Ltd., for the assessment year 1957-58. The issue revolved around the imposition of a penalty under section 18A(9)(b) of the Act due to the assessee's alleged failure to furnish an estimate as required under section 18A(3) of the Act. The Income-tax Officer imposed a penalty of Rs. 51,094, which was later canceled by the Appellate Assistant Commissioner, leading to an appeal by the Income-tax Officer, Lucknow, which was dismissed by the Appellate Tribunal, Allahabad.

The core question before the court was whether the assessee, who had been provisionally assessed under section 23B for the previous year, fell within the scope of persons 'hitherto assessed' under section 18A(3) of the Act, thereby exempting them from the obligation to file an estimate. The court referred to a Supreme Court decision in Income-tax Officer, Kanpur v. Mani Ram, where it was established that provisional assessment under section 23B constituted an assessment for the purpose of section 18A(3). Therefore, the assessee, having been provisionally assessed for the preceding year, was not required to submit an estimate under section 18A(3) or pay the tax for the current year.

In alignment with the precedent set by the Supreme Court, the High Court concluded that the assessment made under section 23B for the previous year categorized the assessee as 'hitherto assessed,' absolving them from the obligation to file an estimate under section 18A(3) for the current year. Consequently, the penalty imposed on the assessee under section 18A(9)(b) was deemed unwarranted. The court ruled in favor of the assessee, directing the Commissioner of Income-tax, U.P., to pay Rs. 200 as costs for the reference.