JAIN BROS Vs. UNION OF INDIA

JUDGEMENT

(1.) In this petition under Articles 226 and 227 of the Constitution of India filed by registered firm Messrs Jain Brothers and its four partners against Union of India respondent No. 1, Central Board of Direct Taxes respondent No. 2, Shri B. L. Dhawan Income-tax Officer respondent No. 3 and Shri T. P. Jhunjhunwala, Appellate Assistant Commissioner respondent No. 4, the petitioners have, inter alia, challenged the vires of clause (g) of sub-section (2) of section 297 and sub-section (2) of section 271 of the Income-Tax Act, 1961 (43 of 1961), (hereinafter referred to as the Act of 1961).

(2.) Petitioner No. 1 is a firm carrying on business in Delhi and has been registered under section 26A of the Indian IncomeTax Act, 1922 (11 of 1922), (hereinafter referred to as the Act of 1922). For the assessment year 1960-61 (account year ending October 31, 1959) a notice dated May 14, 1960 under sub-section (2) of section 22 of Act of 1922 was served by the Income-Tax Officer on May 26, 1960 calling upon petitioner No. 1 to submit a return of income to be filed within 35 days of the service of the notice. The return was thus due by June 30, 1960. The petitioner did not file the return within the time allowed in the notice. Notice under sub-section (4) of section 22 of Act of 1922 was there

(3.) On November 23, 1964 the Income-Tax Officer issued notice , under section 271, read with section 274, of Act of 1961 calling upon petitioner No. 1 to show cause why an order imposing penalty should not be made under section 271 of Act of 1961 for having without reasonable cause failed to furnish the return of income within time as required by law. The assessee submitted explanation. The Income-Tax Officer passed an order on November 19, 1966 under clause (a) of sub-section (1) of section 271 of Act 1961 imposing a penalty of Rs. 1,03,34.00 for non-compliance with notice under sub-section (2) of section 22 of Act of 1922. An application for rectification of the said order was thereafter filed by petitioner No. 1 but the same was dismissed by the Income-Tax Officer on December 2, 1966. He further called upon the petitioner-firm to pay the tax and penalty. The petitioners preferred an appeal before the Appellate Assistant Commissioner respondt No. 4 challenging the imposition of penalty. The said appeal is stated to be still pending. As, according to the petitioners, they are challenging the vires of section 297(2) (g) and 271(2) of Act of 1961, the only forum which can give them relief is this Court and not the Tribunals created by the Income-Tax Act. The present petition was filed on August 26, 1967, and the prayer made by the petitioners is for the issuance of a writ or an order or a direction in the nature of Certiorari, Mandamus or Prohibition quashing the assessment made on the petitioner-firm on November 23, 1964 and the order imposing penalty made on November 19, 1966. Prayer has also been made for the issuance of an appropriate writ or direction to the respondents not to make any assessment on petitioner No. 1 under the provisions of sub-section (5) of section 23 of Act of 1922 nor to impose any penalty and to further direct them to cancel all proceedings already taken under sub-section (5) of section 23 of Act of 1922 and section 271, read with section 274, of Act of 1961.