1972 (6) TMI 17 - HC - Income Tax

Penalty proceedings under s. 273(b) - Whether the reassessment made under section 147(a) of the Income-tax Act 1961 was not a regular assessment and therefore the provisions of section 273(b) could not be validly applied to such a case

Summary

Issues:
1. Interpretation of "regular assessment" under section 273(b) of the Income-tax Act, 1961 in the context of reassessment under section 147(a).

Analysis:
The case involved a registered firm that had undergone reassessment under section 147(a) of the Income-tax Act, 1961. The primary question before the court was whether the provisions of section 273(b) could be applied to such reassessment, considering the term "regular assessment" as defined in section 2(40) of the Act. The firm had initially filed a return disclosing a total income of Rs. 34,480 for the assessment year 1966-67. The assessment was later revised through reassessment, fixing the total income at Rs. 65,130. The Income-tax Officer initiated penalty proceedings under section 273(b) due to the firm's failure to file an income estimate under section 212(3) and non-payment of advance tax.

The firm contended that section 273(b) applied only to "regular assessments" as defined under section 2(40), i.e., assessments made under section 143 or 144, and not to reassessments under section 147(a). Despite the firm's argument, both the Income-tax Officer and the Appellate Assistant Commissioner upheld the applicability of section 273(b) to the reassessment. The Tribunal also supported this view. The court delved into the definitions and provisions of various sections of the Act, including sections 147, 148, 153, 271, and 246, to determine the scope of "regular assessment" under section 273(b).

The court emphasized that assessments made under section 147, including reassessments, do not fall under the category of "regular assessments" as defined in the Act. The court referred to past decisions from the Madras High Court regarding similar provisions under the Indian Income-tax Act, 1922, to support its interpretation. The court concluded that the specific references to "assessment under section 147" in the Act, along with the definition in section 2(40), indicated that assessments under section 147 were distinct from "regular assessments" under section 143 or 144. Therefore, the court ruled in favor of the assessee, stating that section 273(b) could not be applied to reassessments under section 147(a).

The court answered the question referred to it in the negative, directing the parties to bear their respective costs. It clarified that this decision did not impact any proceedings initiated under section 273(b) based on the previous assessment made on November 18, 1966. The court's judgment would be communicated to the Income-tax Appellate Tribunal, Cochin Bench, for further action.