9911796707
TMI Blog1971 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1963-64. The petitioner did not pay the amount as demanded. No action was taken to recover the said advance tax within the time prescribed. Under section 231 of the Act, such recovery of advance tax should have been made within March 31, 1964. No action was taken in this behalf by the revenue. On July 25, 1966, the respondent issued a notice stating that as the record showed that the advance tax demanded for the assessment year was not paid as demanded, he proposed to levy a penalty under section 221(1) of the Act. On receipt of this notice the petitioner has come up to this court for the issue of a writ of prohibition prohibiting the respondent from continuing the proceedings for levying penalty under section 22(1) of the Act as threatened in the impugned notice dated July 25, 1966. To complete the narrative, regular assessments were completed on August 25, 1967, and for the assessment year in question a sum of Rs. 92 was demanded by the officer as tax payable for the assessment year in question. It is also common ground that in W.P. No. 1983 of 1966 and W.P. No. 2008 of 1966 there was a positive assessment in the sense that a small amount was ultimately payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of prohibition ought not to issue on the assumption that the respondent has no jurisdiction to proceed further in the matter after issuing a notice to levy a penalty. On the merits it is stated that notwithstanding the lapse of power to recover the advance tax under section 231, it does not follow as a matter of course that action under section 221, which is an independent facet of procedure prescribed by the statute for payment of penalty when the assessee is in default, cannot be ignored for that reason alone and any proceeding initiated by the appropriate authority to levy or collect a penalty as provided in section 221 is not one which is not exercisable by the statutory authority under the Act. His further case is that notwithstanding the fact that the period prescribed in section 231 for the recovery of advance tax from an assessee in default has expired, it would not prevent the exercise of jurisdiction by the appropriate authority to levy a penalty for disobedience of an order of demand to pay such advance tax within a prescribed time. It is urged that as a demand for the tax was made on December 24, 1962, as that notice of demand gave time for payment of such advance tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed even before such quantification. Lord Dunedin in Whitney v. Commissioners of Inland Revenue, said : " There are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesis, has already been fixed. But, assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay. Thus, the methods of recovery which are invariably the last process in the integrated activity of imposition of a tax is a thing which is completely different from an action under which a proposal to levy a penalty is initiated. In the instant case, the subject-matter is advance tax. The amount has not been paid as demanded and within the time as notified. Any sum payable under the provisions of the Act shall be recoverable in the manner provided in Chapter XVII for the recovery of arrears of tax---see section 229. Therefore, if the amount of advance tax demanded is not paid within the time given, then it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue however would contend that as long as there is a default on the part of the assessee in the matter of non-compliance of the demand made by the Income-tax Officer for payment of a certain sum payable under the Act, then a penalty is leviable for such non-compliance of the direction subject however to the person in default being given an opportunity to be heard. Considerable argument was addressed at the Bar on this question, though small but important. It is common ground that there is no guidance in the text of the Act as to the power of the authority to proceed to levy penalty for non-compliance of the demand to pay a particularised amount within the time prescribed. It appears to me therefore that in such cases the general principles ought to be invoked and applied. Though there is no equity in a tax or an intendment in it, yet the same principle or doctrine cannot be extended to a proposal to levy a penalty or in the matter of the levy of penalty as well. In the instant case it is not in dispute that the primary power to recover advance tax as, demanded by the notice dated December 24, 1962, is lost by no action having been taken as contemplated in Explanation 2 of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether in the instant case the right to proceed with the proposal to levy penalty still survives to the revenue after the period to recover such advance tax has lapsed when there is an exhaustion of that power in reality. Whatever may be said of other amounts due including the tax payable or any other amount payable, those considerations will not straightaway apply to the payment of advance tax as such, because such payment of advance tax, its collection and recovery are governed by special proceedings. If once those proceedings are not availed of in the manner prescribed in section 231 of the Act, there is an exhaustion of that power and it is doubtful whether section 232 can be availed of at all in the matter of recovery of advance tax under the Act. In such circumstances when the power to collect advance tax is not available, it appears to me to be strange that the appropriate authority has still the power after such efflux of time, to issue for the first time a notice proposing a levy of penalty for non-payment of advance tax, which on the date of issue of such notice cannot be demanded, cannot be collected and cannot be recovered. Viewing the situation from first principles ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
