NARAYANAPPA S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under the provisions of section 66 (1) of the Income-tax Act made by the Income-tax Appellate Tribunal, Hyderabad Bench, on an application made by an assessment years.

(2.) IN respect of income of the assessee during the four assessment years to which this reference relates, viz., 1951-52, 1952-53, 1953-54, and 1954-55, the assessee committed default in furnishing its return, although called upon to do so by a notice issued to it under the provisions of section 22 (4) of the Act. After the INcome-tax Officer completed his assessment under section 23 (4) of the Act, he issued a notice to the assessee why penalties should not be imposed on it under the provisions of sections 28 (1) (a) and 28 (1) (b) of the Act for failure to furnish the return under section 22 (2) and for failure to produce the accounts as required by the notice issued under section 22 (4) of the Act. After hearing the assessee, the INcome-tax Officer imposed penalties under both those clauses of sub-section (1) of section 28 of the Act, amounting in the aggregate to a sum of Rs. 15,278. The INcome-tax Officer did not however quantify the penalties imposed under those two clauses separately. IN respect of the default relating to the year 1951-52, as against the maximum penalty of Rs. 4,315 which according to the INcome-tax Officer could have been imposed on the assessee, a penalty of Rs. 1,438 was imposed. Similarly for the assessment years 1952-53, 1953-54 and 1954-55, as against the maximum penalties of Rs. 11,171, Rs. 13,813 and Rs. 33,080 which according to the INcome-tax Officer could have been respectively imposed upon the assessee, he imposed penalties of Rs. 3,723, Rs. 4,604, and Rs. 5,513. From those orders the assessee appealed to the Appellate Assistant Commissioner and to the INcome-tax Appellate Tribunal. Both those sets of appeals were dismissed. The assessee applied for a reference to be made to this court of two questions are of law which were formulated by the assessee and those who questions are the questions before us now. They read :

(3.) NOW in this case, the Income-tax Officer imposed a penalty on the assessee under clause (a) of sub-section (1) for failure on the part of the assessee to furnish its return in compliance with the notice given to it under sub-section (2) of section 22. The maximum penalty which he could have imposed under the provisions of this sub-section as provided by that sub-section is a sum equivalent to one and a half times the tax determined as payable by the assessee. Under clause (b) of this sub-section, the Income-tax Officer imposed a penalty for failure to produce the accounts though called upon to do so under sub-section (4) of section 22. The maximum penalty which he could have imposed as provided by sub-section (1) of section 28 is a sum equivalent to one and a half times the amount of income-tax and super-tax which would have been avoided if the tax had been determined on the basis of the return furnished by the assessee.