Commissioner of Income-tax, Delhl (central) New Delhi v. M/S. Singh Engineering Works (p) Ltd. Kanpur
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 call
ed 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 Appel
late 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 pay
ment of tax. .Sub-section (9) provides, inter a!ia, for the imposi
tion of penalty if the Income tax Officer is satisfied that the asses
see 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
L
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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:
"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 fai
lure 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 as
sessee 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 sec
tion in a proceeding for recovery of tax and penalty im
posed under the Act of 1922 it is not required that all the
s~chons of the new Act relating to recovery or collec
t~on should be literally applied but only such of the sec
tmns will apply as are appropriate in the particular case
(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