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TMI Blog1966 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... years are 1958-59, 1959-60 and 1960-61. There was an imposition of penalty by the Income-tax Officer both under section 271(1)(a) and section 271(1)(b) of the new Act. The Appellate Assistant Commissioner overturned the imposition made by the Income-tax Officer and there were six appeals preferred by the department to the Income-tax Appellate Tribunal. The Tribunal restored the penalties imposed by the Income-tax Officer. At the instance of the assessee, two questions are referred to this court, which read : " (1) Whether, on the facts and in the circumstances of the case, and assuming that there was no reasonable cause for the failures of the assessee as referred to in section 271(1)(a) and 271(1)(b), the Income-tax Officer was right in applying the provisions of and imposing penalty under section 271 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the view that the Tribunal has a discretion under section 271(1)(a) of the Income-tax Act, 1961, as to whether a penalty should be levied at all ?" It should be observed that there is an imperfection in the language of the first question, and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed by the new Act in a case where a return of income is produced after the new Act came into force and that return was produced otherwise than in response to a notice under section 34 of the old Act and the assessment year preceded April 1, 1962. Clause (c) made the provisions of the repealed Act applicable to a pending appeal, reference or revision petition. Clause (d), which has real materiality to the matter before us, reads: " 297. (2)(d).---Where in respect of any assessment year after the year ending on the 31st day of March, 1940,---- (i) a notice under section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed ; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which it refers. But the Income-tax Appellate Tribunal dissented from the interpretation placed by the Appellate Assistant Commissioner on the relevant statutory provisions, and thought that even in a case to which section 297(2)(d)(i) becomes applicable, a penalty could be imposed under section 271 of the new Act in the exercise of the authority created by clause (g) of that sub-section. So, the argument before us surrounded the question whether clause (g) of section 297(2) of the new Act authorises the imposition of a penalty under section 271 of that Act, even in a case in which a notice under section 34 of the repealed Act was issued before the new Act came into force. While, according to Mr. Srinivasan appearing for the assessee, the imposition of a penalty was not possible either under the repealed Act or under the new Act, the stress of the argument maintained by Mr. Rajasekhara Murthy for the department was that there was clear power under section 271 of the new Act to impose the penalties which were imposed by the Income-tax Officer, arising out of clause (g), which, according to him, was a special provision in the new Act in regard to that matter. Now what is perfec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e escaped income to which it refers, and, if a proceeding for that purpose could be continued under the repealed Act, what should follow is that a proceeding for the imposition of a penalty which is part of such assessment is also what is possible under the provisions of the repealed Act. We do not accede to the argument advanced by Mr. Srinivasan that a proceeding which may be continued under clause (d)(i) in that way does not include a proceeding for the imposition of a penalty under section 28 of the repealed Act. The expression " proceedings in pursuance of such notice" is comprehensive enough to include a proceeding for the imposition of a penalty under section 28 of that Act. There is no justification for our placing upon that expression the narrow interpretation suggested. Mr. Rajasekhara Murthy appearing for the department was therefore right in asking us to say that, if, in cases of that description, the imposition of a penalty is not possible under section 271 of the new Act, it becomes clearly permissible under section 28 of the repealed Act. Now we shall proceed to consider whether, as contended by Mr. Rajasekhara Murthy, clause (g) of section 297(2) is a special pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable when there is disobedience to section 142(1) and 143(2) of the new Act. Not unnaturally, the argument constructed was that, since there was no disobedience to section 139(1) or non-compliance with a notice under section 139(2) or 142(1) or 143(2) or 148, the case did not fall within clause (a) or clause (b) of section 271(1) of the new Act, and so, the imposition of a penalty under that sub-section was impermissible. The other submission was that, since a penalty could be imposed under the new sub-section only if the satisfaction to which that sub-section refers was generated in the course of a proceeding under the new Act, and there was none, all the proceedings could only be under the repealed Act as enjoined by section 297(2)(d)(i), and that the exercise of power under section 271(1) was incompetent. The second submission raises a question which is not entirely free from difficulty. The Appellate Tribunal thought that the satisfaction to which section 271(1) refers is a satisfaction in the course of a penalty proceeding and not a satisfaction in the course of the proceedings for an assessment pursuant to a notice under section 34 of the repealed Act. So it came to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not accept the view pressed on us that the proceeding in pursuance of a notice under section 34 of the repealed enactment does not include a proceeding for the imposition of a penalty under section 28. In our opinion, it does. That it does was not also refuted by Mr. Rajasekhara Murthy, who however asked us to depend upon clause (g) of that sub-section as a special provision superseding the general provision contained in clause (d)(i). In support of this postulate we were asked to say that a penalty could be imposed under section 271 not only for non-compliance with the provisions of the new Act to which that section refers, but also for non-compliance with the requirements of the corresponding provisions of the repealed Act. We do not find it possible to accede to this view. A provision like section 271 which authorises the imposition of a penalty has to be given the meaning which its language permits, and if that sub-section authorises the imposition of a penalty only for disobedience to or non-compliance with the provisions of the new Act, we should not find it possible to say that such penalty could be imposed even for non-compliance with the provisions of the repealed Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Act in respect of the period to which clause (g) refers and a notice under section 148 has been issued under the new Act. To a case of that description, to which the provisions of the new Act do not by their own force apply, it was necessary for Parliament to make a special provision, and, when properly understood, the provision in clause (g) has relevance to it. It is not necessary for us to examine whether it applies to any other matter, so long as we find it possible to say that it does not apply to a matter to which clause (d)(i) refers. That being so, the argument that our interpretation of clause (d)(i) would render clause (g) a superfluous and unmeaning statutory provision must be repelled. What we have said so far leads to the conclusion that in the case before us the imposition of a penalty was possible only under section 28 of the repealed Act, and not under section 271 of the new Act. Our answer to the first question, as understood by us, must therefore be in favour of the assessee. The second question asks us to say whether a penalty could not be levied at all under section 271(1)(a). We have already observed that it was by some accidental omission that clause (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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