http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: COMMISSIONER OF INCOME-TAX, DELHI (CENTRAL) NEW DELHI

       Vs.

RESPONDENT: M/S.  SINGH ENGINEERING WORKS (P) LTD.  KANPUR

DATE OF JUDGMENT: 11/08/1970

BENCH: GROVER, A.N. BENCH: GROVER, A.N. SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR   95            1971 SCR  (1) 769  1970 SCC  (2) 428

ACT: Income-tax  Act (43 of 1961), ss. 212, 273 and  297  (2)(g)- Proceedings  under  s.  18-A  of  the   1922-Act-Assessment, completed  after 1st April 1962-Imposition of penalty  under 1961 Act-Validity.

HEADNOTE: The assessee was required under s. 18A(1) of the  Income-tax Act,  1922, to make advance payments of tax  for  assessment years  1960-61  and  1961-62.  The  assessee  made  his  own estimates of the tax for the two years and paid the amounts. But  then 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  years,  and  held  that  the  assessee   furnished inaccurate and untrue estimates if tax and imposed penalties under  s. 273 of the 1961-Act.  The Tribunal held  that  the ’Penalties  could not be imposed, because, (1)  the  default under  s.  18A  of the 1922-Act could not be  treated  as  a default under the 1961 Act; and (2) s.297(2)(g) of the 1961- Act  did not save the proceedings under s.18A of  the  1922- Act. In a reference tothis Court, under s.257 of the 1961 Act, HELD : Section212 of the 1961 Act corresponds to s.18A(2) of the  1922-Act and s.273 of the 1961-Act, which empowers  the levy  of penalty corresponds to s. 18A(9) of  the  1922-Act. According to s. 297(2) (g) of the 1961-Act, a proceeding for the imposition of a penalty in respect of an assessment  for the  year  ending on 31st March 1962 or  any  earlier  year, which  is  completed  on or after 1‘st April  1962,  may  be initiated,  and  the penalty may’ be imposed under  the  new Act.   The  sub-section is applicable to the  present  case, since  the  assessment was completed after 1st  April  1962. Therefore, penalty could be imposed under the 1961-Act, that is,  under s. 273, which will apply mutatis mutandis to  the proceedings. [770 H; 771 A-B; 722 B-C] M/s.   Jain Bros. & Ors. v. Union of India. [1970] 3  S.C.R. 253 followed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Income-tax  Reference  Cases Nos. 1 and 2 of 1969. References  under s. 257 of the Indian Income-tax Act,  1961 made  by the Income-tax Appellate Tribunal, Allahabad  Bench in R.A. Nos. 1253 and 1254 of 1967-68 (I.T.A. Nos. 13922 and 13923 of 1965-66. R.  N. Sachthey and Gobind Das, for the appellant  (in  both the cases). P.  N.  Pachauri,  J.P. Goyal and  Sobhamal  Jain,  for  the respondent (in both the cases). 169Sup-CI(P)/71-5 770 The Judgment of the Court was delivered by Grover,  J. The respondent company which is an assessee  was required  by the Income tax Officer by notices issued  under s.  18A (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 assessment  year  1961-62.   The assessee  chose  to file its own estimate of  tax  under  s. 18A(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 instalments 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  assessee  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/-  and  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  amounting  to  Rs. 13,700/-  and Rs. 12,342/- for the assessment years  1960-61 and   1961-62  respectively.   Appeals  to   the   Appellate Assistant  Commissioner  in  the  matter  of  imposition  of penalty were rejected.  The Appellate Tribunal held that the penalties  could not have been imposed under the  provisions of  s. 273 of the 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 that s. 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  to 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 18A of the old Act makes provision for advance  pay- ment of tax.  Sub-section (9) provides, inter alia, 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

771 of tax in accordance with that estimate.  Section 273 of the new  Act empowers the Income tax Officer to levy penalty  on an  assessee  where  fie  finds  at  the  time  of   regular assessment that the assessee had furnished, under s. 212, an estimate of the advance tax payable by him 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. 18A 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 any such penalty may  be  imposed under the new Act. In  M/s.  Jain Bros. & Others v. The Union of India(1)  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 of 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.  271(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               Office,-, Mangalore v. Damodar Bhat (71 I.T.R.               806) with reference to s. 297(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               sections  of the new Act relating to  recovery               or collection should be literally applied  but               only  such of the sections will apply  as  are               appropriate in the  -particular case (1) (1970) 3S.C.R. 253 772               and   subject,  if  necessary,   to   suitable               modifications.  In other words, the  procedure               of   the   new  Act  will   apply   to   cases               contemplated by s. 297 (2) (j) of the new  Act               mutatis mutandis.  Similarly the provision  of               S.  271 of the Act of 1961 will apply  mutatis

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

             mutandis  to proceedings relating  to  penalty               initiated in accordance with s. 297 (2)(g)  of               that Act". , In  our judgment s. 297(2)(g) is clearly applicable  to  the present case inasmuch as the assessment was completed on  or after  the first day of April 1962.  The provisions  of  the new  Act contained in s. 273 will apply mutatis mutandis  to proceedings relating to penalty initiated in accordance with s.  297(2)(g) of the new Act.  The question which  has  been referred to us is answered in the affirmative and in  favour of  the Commissioner of Income tax who will be  entitled  to his costs in this Court. V. P. S. 773