Commissioner of Income-Tax, Delhi (Central), New Delhi v. M/S Singh Engg. Works (P) Ltd., Kanpur

A B ### c D E F G 7ti9 COMMISSIONER OF INCOME-TAX, DELHl (CENTRAL) NEW DELHI ##### _v._ M/S. SINGH l!:NGlNEERING WORKS (P) LTD. KANPUR _Aug.ust_ 11, 1970 (J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.j _ftlcome-tax_ _Act_ \43 _of_ 1961), _ss ._ . 212, 273 _and_ 297 _(2)(g)-Proceed-_ _ingl'_ _under_ _s._ 18-A _of_ _the 1922-Act-Assessinent; cornpleted_ _after_ _1st_ _April_ l~b2-lmposition _of_ _penalty under_ 1961 _Act-Validity._ The asse~see was req!.lired under s. l8A( I) of the lncom~·tai. Act, 1922, tc make advance payments of tax for asse;sment years 1960-61 and 1961-62. The assessee made his own estimates of the tax for the two yl.!ars and paid the amounts. But th:::n the assessee filed returns of income for the two years, the Income-tax. Officer assessed the total income of the assessee on January 21, 1963, at much higher figures for the two yi:u.rs, and held that the assessee furnished inaccurate and untru~ estimates of lax and imposed penalties under s. 273 of the 1961-Act. The Tribunal held that the penalties could not bo imposed, because, ( 1) the default under s. !SA of the 1922-Aot cuuld not be treated as a default under tho l9t>l Act; and (2) s.297(2)(g) of the 1961-Act did not Sa\<: the pro- ' #### cecdings under s.JSA of the 1922-Act. I In a reference to this Court, under s.257 of the 1961 Act, HELD : Section 212 of the 1961 Act corresponds to s.18A(2) o! the l922-Act and s. 273 o! the 1961-Act, which empowers the levy of pcnolty corresponds to s. 18A(9) o! the 1922-Act. According to s. 297(2) (g) of the 1961-Act, a proceeding for the impositilin of a penaity in respect of an assessment for the year ending on 31st March 1962 or any carlil'f year, which is completed on or after 1st .A.pril 1962, may be ioitiC!ted, and the penalty may be imposed under the new Act. The sub-section is applicable to th.e pn .. >Scnt case, since the assessn1 .. ~nt was com· plctcd after 1st April 1962. Th·ordore, penalty could bo imposed under th., l96l·Act, that is, under;, 273. which will apply _nwtati>_ _nwtandis_ to the proceedings. [770 H; 771 A-B; 722 B-CJ _M!.r._ _Jain_ _81w._ & _Ors._ v. U11ir111 _of_ _/11di<1._ [1970] 3 S.C.R. 251 followed. C1v1L APl'ELLATE JURISDICTION: Income-tax Reference Cases Nos. 1 dnd 2 of 1969. References under s. 257 of the Indian l111Come-tax Act, 1961 made by the Income-tax Arpe\hte Tribur:al, AllahabJd Bench in R.A. Nos. 1253 and 1254 of 1967-68 (LT.A. Nos. 13)22 a11d 13923 o.f 1965-66. _R._ _N._ _Sachthey_ and _Gobind_ _Das,_ for the appellant (in both the H .:ases). _P._ _N._ _Pachauri,_ _J._ _P._ _Goyal_ and _Sob;iamal Jain,_ fer the respondent (in both the cases). L169Sup.Cl(P)/71-5 770 SUPREME COURT REPORTS [1971] 1 S.C.R. The Judgment of the Court was delivered by **Grover,** **J,** The respondent company which is an assessee was required by the Incom'! tax Officer by 110tices issued under s. l 8A (1) of the Indian Income .tax Act 1922, hereinafter called the "Old Act" to make an advance payment . ·of tax amounting to Rs. 3,17 077 for the assessment year 1960 .. 61 and Rs. 3,54,911 for the ~ssessment year 1961-62. The assessee chose to file its own estimate of tax under s. l 8A(2) and in accordance therewith it paid two instalments of advance tax of Rs. 38,333/- each for the assessment year 1960-61 and three mslalments of Rs. 12,875/each for the assessment year 1961-62. Thereafter the assessee filed revised estimates of tax in the month of March 1960 and March 1961 respectively estimating the tax at Rs. 1,80,000/- for each of the assessment years on a total income of Rs. 4 lakhs. The balance of advance tax as per its revised estimate was paid in time after deducting the instalments which had already been paid. The a.ssessee subsequently filed its returns of income for the aforesaid two years declaring the total income of Rs. 4,53,942/- and Rs, 7,02,383/- respectively. The Income tax Officer completed the assessment of total income of Rs. 5,35,000/- ancJ Rs. 8,99,029/- for the assessment years 1960-61 and 1961-62 on January 21, 1963 after the Income tax Act 1961, hereinafter called the "New Act" had come into force. The Income tax Officer took the view that the assessee had furnished inaccurate and untrue estimates of tax and had not given any satisfactory explanation in respect of them. He imposed penalties under s. 273 of the new Act amom:Hing to Rs. 13 _.700:'_ - and Rs. 12.342/ _for the assessment years 1960-61 and 1961-62 respectively. Appeals to the Appellate Assistant Commissioner i11 the matter of imposition of penalty were tejected. The Appellate Tribunal held that the penalties could not have been imposed under the provisions of s. 273 of th' new Act in respect of the two assessment years in question. It was said _inter alia,_ that in the absence of any deeming provision in the new Act the default under s. 18A of the old Act could not be treated as a default under s. 212 of the new Act and thats. 297(2) (g) of the new Act did not save the proceedings under s. 18A of the old Act. A question of law was referred directly tci this Court under the provisions of s. 257 of the new Act owing to the conflict between the decisions of the various High Courts. Section l 8A of the. old Act makes provision for advance payment of tax. .Sub-section (9) provides, _inter_ _a!ia,_ for the imposition of penalty if the Income tax Officer is satisfied that the assessee has furnished estimates of the tax payable by him which he knew. or had reason to believe to be untrue. In the new Act s. 212 makes provision for the estimate by the assessee and payment **A** B ### c L E G **H** A B ### c D ## I E F G H C.l.T. _v._ SINGH ENGG. WORKS (Grov~r. _J.)_ 771 of tax in accordance wilh ilia! estimate. Section 273 of .the new Act empowers the Income tax Oflicei: to levy penalty on an assessee where he finds at the time of regular assessment that the assessee had furnished, under ~. 212, an estimate of the advance tax payable by hiin which he knew or had reason to believe to be untrue. As stated before the Tribunal was of the opinion that s. 297 (2) (g) of the new Act did not save proceedings under s. _IBA_ of the old Act. According to that provision any proceeding for the imposition of a penalty in respect of any assessment for the year ending on 31st day of March 1962 or any earlier year which is completed on or after the first day of. April 1962 may be initiated and ~ny such penalty may be imposed under' the new Act. In _M/ s._ _Jain Bros._ _&_ _Others_ v. _The Union_ _of_ _India(')_ this Court examined the provision of s. 271 which also appears in Chapter XXI under which s. 273 is to be found and the provision of s.297(2)(g) of the new Act. This is what was stated in that case: t~on should be literally applied but only such of the sectmns will apply as are appropriate in the particular case "We are further unable to agree that the language ot s. 271 does not warrant the taking of proceedings under that section when a default has been committed by failure to comply with a notice issued under s. 22(2) of the Act of 1922. It is true that cl. (a) of sub-s. (1) of s. 271 mentions the corresponding provisions of the Act of 1961 but that will not make the part relating to payment of penalty inapplicable once it is held that s. 297(2)(g) governs the case. Both ss. 271(1) and 297(2)(g) have to be read together and in harmony and so read the only conclusion possible is that for the imposition of a penalty in respect of any assessment for the year ending on March 31, 1962 or any earlier year which is completed after first day of April 1962 the proceedings have to be initiated and the penalty imposed in accordance with the provisions of s. 271 of the Act of 1961. Thus the assessee would be liable to a penalty as provided by s. 27'(1) for the default mentioned in s. 28(1) of the Act of 1922 if his case falls within the terms of s. 297(2)(g). We may usefully refer to this Court's decision in Third _Income tax Officer, Manga/ore_ v. _Damodar Bhat_ (71 I.T.R. 806) with .reference to s. ?.97(2)(j) of the Act of 1961. According to it in a case falling within that section in a proceeding for recovery of tax and penalty imposed under the Act of 1922 it is not required that all the s~chons of the new Act relating to recovery or collec (l) (1970' JS.C.R. 253 772 SUPREM~ .COURT REPORTS (!971) 1 S.C.R. and subject, if neecssary, to suitable modifications. In A other worcis, tiie procedure of the new Act will apply to cases contemplated bys. 297(2) (j) of the new Act mu_tatis mutandis._ Similarly the provision of s. 271 _of_ the A.:t of 1961 will apply _mutatis mutandis_ to proceedings relating to penalty initiated in accordance with s. 297 (/.)(g) of that Act". B In our judgment s. 297(2)1 gJ is clearly applir.able to the present case inasmuch as the assessment was completed on or after the first day of April l 962. The ~rovisions of the new Act contained in s. 273 will apply _mutatis mutandis_ to proceedings relating to penalt) initiated iu accordance with s. 297(2)(g) of the new Act. The question which has been referred to us is answered in the C affirmative and in favour of the Commissione" of Income tax who will be entitleu to his costs in this Court. V. P. S. # I