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TMI Blog1966 (8) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... two questions which have been placed before us for decision are : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal acted rightly in upholding the application of section 297(2)(g) read with sections 271(1)(a) of the Income-tax Act, 1961, for the delay in the submission of returns for the assessment years 1959-60 and 1960-61 ? (sic). 2. In the event of question No. 1 being answered in the affirmative, whether on the facts here, and on a proper interpretation of section 271(1), the penalty levied has been properly computed ?" For the assessment year 1960-61 the assessee filed his return on 20th March, 1962. The assessment for that year was completed on 20th September, 1962. He filed his return on 31st March, 1962. for the next assessment year, namely, 1961-62. The assessment for that year also was completed on 20th September, 1962. Admittedly, the returns for these two assessment years were not filed within time by the assessee. Consequently, the Income-tax Officer imposed on the assessee a penalty of Rs. 10,600 under section 271(1)(a) of the Income-tax Act, 1961, for his failure to file in time the return for the assessment year 1960-61. The penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143, or (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,--- (i) in the cases referred to in clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax. . . . . " The material part of section 28(1) of the 1922 Act was in the following terms : " 28. (1) Penalty for concealment of income or improper distribution of profits.---If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person--- (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish by notice given under sub-section (1) or sub-section (2) of section 22 or section 34 or has without reasonable cause failed to furnish it within the time allowed and in the manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as was required of him by section 22(1). Before any penalty could be imposed on the assessee under section 28(1), that Act was repealed by the 1961 Act. But clause (g) of section 297(2) of the 1961 Act clearly provides that any proceeding for the imposition of a penalty in respect of any assessment for the year ending on 31st March, 1962, or any earlier year, which is completed on or after 1st April, 1962, may be initiated and any such penalty may be imposed under the 1961 Act. As here the assessment years were 1960-61 and 1961-62 and the assessment for those years was completed after 1st April, 1962, clause (g) directly became applicable for the initiation and imposition of penalty for the assessee's failure to submit his returns in time. The plain effect of clause (g) is that in cases falling under that clause the penalty would be that prescribed by section 271(1). Shri Chitaley, learned counsel appearing for the assessee, however, contended that section 297 (2)(g) was only a machinery provision and not a charging provision and the 1961 Act did not prescribe any penalty for the assessee's failures mentioned in section 28(1)(a), (b) and (c) of the 1922 Act, in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear and distinctly says that any proceeding for the imposition of penalty in respect of the assessment year referred to in the clause may be initiated and any such penalty may be imposed under the 1961 Act. To construe the clause as empowering only the initiation of proceedings for the imposition of penalty and not the imposition of penalty itself under the 1961 Act is to render altogether nugatory the words " any such penalty may be imposed under this Act ", occurring in that clause. The conclusion that clause (g) deals not only with the initiation of proceedings for the imposition of penalty but also with imposition of penalty itself is reinforced if clause (g) is compared with the preceding clause, namely, clause (f). Clause (f) provides that "any proceeding for the imposition of a penalty in respect of any assessment completed before the 1st day of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed ". The plain meaning of the expression " proceeding may be initiated and any such penalty may be imposed as if this Act had not been passed " is that in cases covered by clause (f), proceedings for the imposition of a penalty may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Income-tax Officer to produce such accounts or documents as the Income-tax Officer may require or with a notice issued to him by the Income-tax Officer requiring him on a date specified in the notice, either to attend the Income-tax Officer's office or to produce or cause to be produced any evidence on which the assessee relies in support of the return submitted by him ; (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. These are precisely the defaults for which penalty can be imposed under section 271(1) of the 1961 Act. This becomes clear if section 271(1) is read after substituting for the reference to certain provisions occurring in clauses (a) and (b) thereof, the acts which the assessee is required to do and the failure of doing which constitutes default. The substance of the matter is the nature of the acts and omissions of the assessee for which he is liable to penalty and not the particular provisions, whether of the 1922 Act or the 1961 Act, under which the assessee is required to do those acts or is restrained from doing them. The defaults for which an assessee is liable to penalty under section 28( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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