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TMI Blog1961 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... enactment of section 13(1) of the Finance Act, 1950. The appeal will, therefore, be allowed and the answer to question will be recorded in the affirmative. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the following questions were referred by the Tribunal to the High Court of Judicature at Hyderabad : " 1. Whether on October 31, 1951, the Income-tax Officer, Warrangal Circle, had the power to impose a penalty under section 40(1) of the Hyderabad Income-tax Act in respect of the assessment for the year 1357 F. ? 2. Whether the assessee had a right to appeal against the order of the Income-tax Officer imposing the penalty ? 3. If the Appellate Assistant Commissioner did not have jurisdiction to hear the appeal, whether the order of the Appellate Assistant Commissioner is a nullity and, therefore, the order of the Income-tax Officer erroneous, though it may stand until it is set aside by a competent authority ? " The High Court an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Assistant Commissioner had as a court of appeal jurisdiction to determine the soundness of the conclusions of the Income-tax Officer both on questions of fact and law and even as to his jurisdiction to pass the order appealed from. We are, however, unable to agree with the High Court that because of the repeal of the Hyderabad Income-tax Act by the Finance Act, 1950, the power to impose a penalty in respect of the years preceding the date of repeal was lost. The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income-tax Officer. Thereafter the Indian Legislature enacted the Finance Act, 1950, which by sub-section (1) of section 13 in so far as it is material provided : " If immedia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g liability and procedure in that behalf. By the Finance Act, 1950, the Hyderabad Income-tax Act was expressly kept alive in respect of periods which include the assessment year in question for purposes of levy, assessment and collection of income-tax. The High Court expressed the view that the word " assessment " in section 13(1) included the whole procedure for imposing liability upon the taxpayer but not to the procedure for imposing a penalty. They thought that the Hyderabad Income-tax Act dealt with liability to pay income-tax and penalty in distinct provisions, both relating to imposition and recovery and that if the Legislature had intended to keep alive the Hyderabad Income-tax Act for all purposes including the levy of penalty with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration and imposition of tax liability and the machinery for enforcement thereof ... By section 28, the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee. " This court regarded penalty as an additional tax imposed upon a person in view of his dishonest or contumacious conduct. It is true that under the Hyderabad Income-tax Act, distinct provisions are made for recovery of tax due and penalty, byt that in our judgment does not alter the true character of penalty imposed under the two Acts. Nor are we able to agree that because in respect of the Sea Customs Act, 1878, the Indian Tariff Act, 1934, the Land Customs Act, 1924, the Central Excise and Salt Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings for penalty may be commenced and continued under the Acts specified in section 11, whereas no such proceedings may be commenced or continued under the Hyderabad Income-tax Act is not indicated. We are of the view that the High Court erred in holding that the proceedings for imposing the penalty could not be continued after the enactment of section 13(1) of the Finance Act, 1950. The appeal will, therefore, be allowed and the answer to the first question will be recorded in the affirmative. On the view taken by us, it is unnecessary to pass any orders on the petition under article 226 of the Constitution which was presented to the High Court. The appellant will be entitled to his costs of the appeal in this court and High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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