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TMI Blog1969 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... with the assessment for the year 1961-62. For this year the assessee filed on January 29, 1962, a return of its total income under section 22 of the Income-tax Act, 1922 (hereinafter called " the old Act "), admitting Rs. 17,289. But after scrutiny of the accounts, the Income-tax Officer added back Rs. 35,532 out of the expenses account and he also made an estimated addition of Rs. 41,407 in tyres and tubes account. Further, the Income-tax Officer added certain cash credits aggregating to Rs. 8,500 in the account of third parties alleged to be loans as the assessee's income from undisclosed sources. He completed the assessment under section 23(3) of the Income-tax Act, 1922, long after March 31, 1962. On appeal before the Appellate Assistant Commissioner the addition of Rs. 41,407 to the trading account was reduced to Rs. 10,000 and further retained a sum of Rs 4,500 out of the cash credits found in the assessee's books adopting the peak credit, i.e., accepting those credits which were covered by sufficient prior withdrawals. The penalty proceedings in question were initially started by the Income-tax Officer in respect of the addition as income from undisclosed sources, but since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax . As pointed out by the Tribunal, there are decisions to the contrary as reported in the case of Kishanlal v. Commissioner of Income-tax, in which it has been held that the assessee is liable to penalty under section 271(1) of the Act of 1961 for defaults referred to in section 28(1) of the old Act in respect of the assessment for the year ending on March 31, 1962. The Act came into operation on April 1, 1962, and in view of the conflicting decisions we shall have to refer to, in the first instance, the relevant section of the Act under which the penalty proceedings may be drawn up. It is an undisputed fact, that the penalty proceedings were started after the coming into operation of the Act, in respect of the alleged concealed income referred to in section 271(1)(c) of the Act and that the alleged offence of concealment of income or of deliberately furnishing of inaccurate particulars of such income was committed in respect of assessment proceedings which were started during the operation of the old Act, but completed after the new Act had come into force. In the above circumstances, it is for us to consider whether the Income-tax Officer was justified in taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's contention is that, by virtue of the provisions of section 297(2)(a) of the Act, the penalty proceedings ought to have been started under the provisions of section 28(1) of the old Act, as it specifically provides for such action being taken. Sub-section (2)(a) runs as follows :- "Where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed." It is, therefore, urged by Mr. Lahiri that, when once the assessment proceedings were started under the old Act, irrespective of the dates of completion, the penalty proceedings ought to have been continued under that Act. Clauses (f) and (g) of sub-section (2) of section 297, respectively, run as follows : " (f) 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 ; (g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceeding has been completed after the coming into operation of the new Act. It will be clear from the scheme of the Act that the penal provisions have been separated from the provision of "assessment and deduction" and Chapter 21 has been introduced on the subject "Penalties Imposable." This shows that the penal provision under the new Act forms a distinct class. having a different entity from " assessment " and therefore we are of the view that Abraham's decision, as stated before, will have no application in this case. In this connection, however, Mr. Lahiri has referred us to the Supreme Court decision in Kalawati Devi Harlalka v. Commissioner of Income-tax. In this decision, it appears that their Lordships considered a case where assessment was made on 7th February, 1961, for the assessment years 1952-53 to 1960-61 under the Income-tax Act, 1922, and on January 24, 1963, after the repeal of the old Act the Commissioner had issued a notice under section 33B of the old Act to revise those assessments. On this fact, their Lordships held that the Commissioner had jurisdiction to issue the notices under section 33B of the old Act, in view of section 297(2) of the Act. Their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 28 are substantially similar to clauses (a), (b) and (c) of section 271 (1) of the Act and in so far as the quantum of penalty is concerned it does not appear that the maximum limit of penalty which may be imposed under the Act to be larger than what was imposable under the old Act. At the next place we shall proceed to discuss the decisions referred to us by Mr. Lahiri in support of his contention. The first case on the point is in S. C. Magavi Haveri v. Commissioner of Income-tax. It was decided in this case by their Lordships of the Mysore High Court that : "No penalty under section 271 of the Income-tax Act, 1961, can be levied in respect of defaults committed under the Indian Income-tax Act, 1922 ; but for such defaults penalty under section 28 of the old Act can be levied. Section 297(2)(g) does not apply to a matter to which section 297 (2)(d)(i) refers, but applies only to a case failing under section 297(2)(d)(ii)." The next case referred to by Mr. Lahiri is Miss Saroj Nayudu v. Appellate Assistant Commissioner of Income-tax. This case arose out of a writ petition challenging a notice issued by the Income-tax Officer, under section 271(1)(c) of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w these decisions then the contention of the department may be negatived. We shall show later on whether it will be necessary for us to deviate from them. Mr. J. P. Bhattacharjee has, with great respect to the said decisions, submitted that on the clear meaning of section 297(2)(g) of the Act they are distinguishable from the instant case and has, in the first place, referred to us the decision in Kishanlal v. Commissioner of Income-tax. The Madhya Pradesh High Court decided that an assessee is liable to penalty under section 271(1) of the Act of 1961 for defaults referred to in section 28(1) of the Act of 1922 in respect of any assessment, for the year ending on March 31, 1961, or any earlier year, which is completed on or after April 1, 1962. According to this decision the period of completion of assessment is the criterion for determining whether any case comes within the ambit of section 297(2)(g) the Act. In the instant case also it appears, as stated before, that the assessment was completed long after the date on which this Act came into operation and as such the Income-tax Officer embarked upon the penalty proceedings under section 271 of the Act. He has also referred u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 297(2)(j) of the new Act, for example, in a proceeding for recovery of tax and penalty imposed under the old Act, it is not required that all the sections of the new Act relating to recovery and collection should be literally applied but only such of the sections will apply as are appropriate in the particular case and subject, if necessary, with suitable modifications. In other words, the procedure of the new Act will apply to the cases contemplated by section 297(2)(j) of the new Act mutatis mutandis. Further, it has been held that in respect of matters where Parliament clearly expressed its intention by incorporating specific provisions, section 6 of the General Clauses Act will not apply. The trend of this decision clearly points out that each of the provisions of clauses (a) to (m) of section 297(2) are self-contained and they have their applicability on their own force untrammelled by any other considerations. In view of this we cannot accept the argument of Mr. Lahiri that the existence of clause (a) of the aforesaid section renders clause (g) nugatory. At the next place, we may refer to another decision of the Supreme Court made in T. S. Baliah v. T.S. Rangachari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat section 6 of the General Clauces Act will not apply in respect of those matters where Parliament had clearly expressed an intention to the contrary by making detailed provisions for similar matters mentioned in that section. Upon consideration of the aforesaid decisions and the points of law involved, we conclude as follows : (1) When no specific provisions have been made in sub-section (2) of section 227 of the Act, the provision of section 6 of the General Clauses Act may be attracted. (2) When section 297(2) is meant to provide as far as possible for all contingencies which may arise out of the repeal of the old Act, section 6 of the General Clauses Act will not come into play. (3) Section 297(2) expresses an intention of Parliament regarding the "savings", and none of the provisions appear to be contradictory to the other. (4) This savings section has to be considered as a whole and it cannot be said that if one of the clauses applies or does not apply, resort cannot be had to the other clauses in the section. According to the maxims of interpretation, the words used therein should be given their natural, meaning. (5) Clauses (f) and (g) of the above section mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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