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TMI Blog1973 (2) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 156 of the Income-tax Act, 1961 (hereinafter called the Act "), for the payment of advance tax under section 210 of the Act in Form No. 28 in pursuance of the order of the Income-tax Officer dated July 28, 1967. The notice was served on the assessee on September 4, 1967. The first instalment of Rs. 8,129 was due on December 1, 1967, and the second instalment of similar amount was due on March 15, 1968. The first instalment of Rs. 8,129, which fell due on December 1, 1967, was not paid by the assessee and notice under section 221(1) of the Act was issued to him on December 15, 1967, requiring him to show cause on December 26, 1967, as to why penalty be not imposed for non-payment of the amount of Rs. 8,129. The notice was serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 221 of the Act. The learned Tribunal relied on a Division Bench judgment of the Mysore High Court in S. Narayanappa and Brothers v. Income-tax Officer, which was a case under the Indian Income-tax Act, 1922, wherein it was held that penalty under the provisions of section 46(1) and (1A) of the Indian Income-tax Act, 1922, could be levied on an assessee who committed default in the payment of advance tax demanded under section 18A of that Act. A Division Bench of the Allahabad High Court considered this matter in Smt. Kusum Kumari v. Union of India and held that penalty could be imposed under section 221 of the Act on an assessee who committed default in payment of advance tax. The relevant observations are as under: " There is no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or before the due dates, the assessee will be treated to be in default in respect of such instalments and will be liable under section 221 to a penalty. On behalf of the revenue, we have been referred to Narayanappa Brothers v. Income-tax Officer. In that case the Mysore High Court laid down that the power to impose a penalty under section 46(1) and section 46(1A) could be employed in the case of an assessee who had defaulted in paying advance tax under section 18A. It is pointed out by the petitioner that the decision relates to section 18A, Indian Income-tax Act, 1922, and cannot be applied to a situation obtaining under the new Act. It is not necessary for us to weigh the merits of that contention, because we are satisfied that upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment is made and under section 221 of the Act penalty can be imposed on an assessee who is in default or is deemed to be in default in making a payment of tax. Since the assessee in the present case failed to pay the instalment of the advance tax due on December 1, 1967, and did not submit any estimate or revised estimate under sub-section (1) or sub-section (2) of section 212 of the Act, he was rightly deemed to be an assessee in default in respect of that instalment. The next question for consideration is whether penalty could be imposed on the assessee in the instant case under section 221 of the Act which reads as under : " 221. (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said notice, the assessee shall be deemed to be in default. It is clear from the language of this section that it applies only to the amounts other than advance tax. Section 221 (1) enacts that penalty will be payable in addition to the amount of arrears and the amount of interest payable under sub-section (2) of section 220. This language lends support to the construction that the failure to pay only the amounts mentioned in section 220 of the Act will invite penalty proceedings under section 221(1). The section can also mean that an assessee, who is in default or is deemed to be in default, is liable to pay the penalty mentioned in section 221 which will be in addition to the amount of the arrears and the amount of interest payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory in nature as the rules and forms are laid before the House of Parliament under section 196 of the Act for a total period of thirty days. It has been held by their Lordships of the Supreme Court in Karimtharuvi Tea Estates Ltd. v. State of Kerala that such rules have effect as if enacted in the Act. Form No. 28 prescribed under rule 38 has, therefore, the effect as if it was enacted in the statute itself. Paragraphs 7 and 8 of the Form read as under : "7. If not having made an estimate of the advance tax payable by you under section 212(1) or (2) you do not pay any instalment of tax on or before the date on which as specified in paragraph 3 of this notice it becomes due, you will be treated as in default in respect of such instalme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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