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TMI Blog1972 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... x assessee for a long time. These references relate to the five assessment years 1953-54 and 1955-56 to 1958-59. The assessee's accounting year was the Malayalam year, which ends by the middle of August every Gregorian year. The Income-tax Officer called upon the assessee during the years mentioned above to pay advance tax under section 18A(1) of the Indian Income-tax Act of 1922. Instead of paying the demanded amounts, the assessee filed estimates under section 18A(2) and on the basis of the said estimates paid advance tax. Ultimately, for the several years, he filed returns ; and the Income-tax Officer finally determined his incomes too. Of course, there were appeals before the Appellate Assistant Commissioner and the Appellate Tribunal, but the assessments made by the Income-tax Officer were confirmed. Thereafter, the Income-tax Officer passed penalty orders under section 18A(9)(a) of the Act. We shall show herein below in a tabular form the incomes estimated by the assessee, the incomes returned by him, the incomes finally assessed and the penalties imposed for the several years : ------------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mates he was giving were untrue was based on the refusal of the Income-tax Officer to accept the explanation offered by the assessee. In the decision of the Supreme Court referred to above (Anwar Ali's case ), what happened was that, in making the assessment, the Income-tax Officer discovered an undisclosed bank account of the assessee in which a cash deposit of Rs. 87,000 had been made. The explanation of the assessee was that that sum represented diverse amounts entrusted to him by his relatives who had got panicky during the communal riots in Bihar in the particular year. The Income-tax Officer rejected the explanation and brought the sum of Rs. 87,000 to tax as the assessee's income from undisclosed sources, and, on that basis, a penalty of Rs. 66,000 was also imposed on the assessee. On appeal, the Tribunal held that no penalty could be imposed on the basis that the onus lay on the assessee to explain the omission to mention this amount, and pointed out that the law was that the onus lay on the revenue to show by adequate evidence that the amount concerned was really of a revenue nature and the assessee had concealed it. The Tribunal went further and held that the mere rejecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly at the end of the relevant years. For instance, in the first, second and fourth years, the estimates were filed in June, in the third year, the estimate was filed in July and in the last year, the estimate was filed only after the year was out, in September. Evidently, the assessee must have been in possession of sufficient materials then as to how his businesses fared during the relevant years. The assessee estimated his income for the first year at Rs. 30,000, while his income finally determined for the year was over Rupees one lakh. For the second year, the estimate of the assessee was a loss, but the income finally determined for that year was also over a lakh of rupees. Similarly, for the third and fourth years also, the disparity between the estimated incomes and the incomes finally determined were very wide. And for the last year, the estimate of the income was nil, while the income for which he was finally assessed was over one lakh of rupees. Thus, the wide disparity between the estimated incomes and the assessed incomes is a consistent feature for all the years and not a casual feature in one year. All these circumstances taken together will go to show that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act of 1922. Under the Act of 1922, there is no limitation for the imposition of penalty, while, under section 275 of the Act of 1961, there is limitation. We may also point out in this connection that, by the Taxation Laws (Amendment) Act of 1970, section 275 of the Act of 1961 has been amended and the period of limitation is also altered. We may straightaway observe that we are not directly concerned with any period of limitation in these cases : we point out these things only to bring out the difference between the Act of 1922 and the Act of 1961 on this question. The argument of Mr. Swaminathan, with which we are concerned in these cases (relating to the last two years only), is one under section 297(2) of the Act of 1961. Clauses (f) and (g) of section 297(2) read : " (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 earlier year, which is completed on or after the 1st day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom these Mr. Swaminathan has argued that the expression " assessment completed " in clause (f) of section 297(2) can mean only the completion of the entire proceeding relating to the assessment : in other words, it has been contended that an assessment is completed only when the Tribunal passes the appellate order, or, if there is a reference to the High Court, when the High Court answers the reference. If this contention is accepted, the assessments, for the two years mentioned above were completed only after the 1st day of April, 1962. But it is not possible to accept this contention on the basis of the reasoning of the Supreme Court in the decision cited by the counsel. As we have already indicated, the Supreme Court considered in that case the expression "proceedings for the assessment " which evidently connoted the entire proceedings, whereas the expression we have to consider in clause (f) is " assessment completed ". It cannot be said that an assessment is completed only when the Tribunal or the High Court ultimately pronounces on its correctness: It is completed when the assessing authority completes his work and passes an order. Clause (f) of section 297(2) deals with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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