COMMISSIONER OF INCOME TAX Vs. RAJINDER KUMAR SOMANI

JUDGEMENT

(1.) This is a reference under Section256(1) of the Income Tax Act 1961 and relates to the assessmentyear 1959-60. The applicant is the Commissioner of Income-taxand the respondent assessee is Rajender Kumar Somani. The questions of law which have been referred to us for decision are as follows:

(2.) . The facts leading to the reference may be briefly stated. Forthe assessment year 1959-60 the assessee should have filed an estimate under Section 18A of the Indian Income-tax Act, 1922 andpaid advance tax but failed to do so. Its return of income underSection 22(1) of the Income-tax Act 1922 was also due to be filedby June, 1959 but was failed only on 5-8-1961. The Income-taxOfficer completed the assessment of the assessee on 28-11-1963. Atthe bottom of the assessment order, after determining the total income at Rs. 64,663, the Income Tax Officer observed :

(3.) . The Income-tax Officer issued two notices to the assesseeunder Section 274 of the Income-tax Act 1961 calling upon him toshow cause why penalties should not be levied under Section 273 ofthe Act for failure to pay advance tax and under Section 271(1)(a)for the delay in the filing of the return. The assessee contended,inter alia, that the penalty proceedings had not been initiated in the course of assessment proceedings and were therefore invalid. Thiscontention was rejected by the Income Tax Officer who held thatpenalty proceedings had been commenced on 28-11-1963 itself whenthe assessing officer had recorded the fact of initiation of penalty inhis order under Section 23(3). He proceeded to consider whetherthere was reasonable cause for the failure on the part of the assesseeto pay advance tax and file the return in time and came to the conclusion that the penalties were called for. He, therefore, imposedpenalties of Rs. 12,705 and Rs. 4000 respectively under Section271(1)(a) and Section 273 by separate orders dated 26-11-1975.