RAJAKUMARI T R Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) A common point arises in all these writ petitions. I shall notice the facts in W.P. No. 1982 of 1966 as it would be sufficient for the purpose. I shall however refer to certain salient features in each of the petitions in the course of my judgment.

(2.) IN W.P, No. 1982 of 1966 the petitioner was served with a notice of demand dated December 24, 1962, under Section 210 of the INcome-tax Act, 1961, hereinafter referred to as the Act. IN the notice the petitioner was required to pay a sum of Rs. 2,966.74 as advance tax in one instalment on or before March 15, 1963. This was so because no earlier demand for payment of advance tax was made, which if made would enable the petitioner to pay such advance tax in equated instalments as prescribed under the Act. The advance tax was demanded during the assessment year 1963-64. The petitioner did not pay the amount as demanded. No action was taken to recover the said advance tax within the time prescribed. Under Section 231 of the Act, such recovery of advance tax should have been made within March 31, 1964. No action was taken in this behalf by the revenue. On July 25, 1966, the respondent issued a notice stating that as the record showed that the advance tax demanded for the assessment year 1963-64 was not paid as demanded, he proposed to levy a penalty under Section 221(1) of the Act. On receipt of this notice the petitioner has come up to this court for the issue of a writ of prohibition prohibiting the respondent from continuing the proceedings for levying penalty under Section 22(1) of the Act as threatened in the impugned notice dated July 25, 1966. To complete the narrative, regular assessments were completed on August 25, 1967, and for the assessment year in question a sum of Rs. 92 was demanded by the officer as tax payable for the assessment year in question.

(3.) THUS, the methods of recovery which are invariably the last process in the integrated activity of imposition of a tax is a thing which is completely different from an action under which a proposal to levy a penalty is initiated. In the instant case, the subject-matter is advance tax. The amount has not been paid as demanded and within the time as notified. Any sum payable under the provisions of the Act shall be recoverable in the manner provided in Chapter XVII for the recovery of arrears of tax--see Section 229. Therefore, if the amount of advance tax demanded is not paid within the time given, then it is recoverable as arrears of tax. If it it recoverable as arrears of tax, the assessee in question would be deemed to be a person in default or a person deemed to be in default if he fails to make payment. In such circumstances, if the notice under Section 221 is issued giving the assessee a reasonable opportunity of showing cause against the levy of a penalty for non-payment, it would not by any process of acceptance be equated to a proceeding for recovery of tax. It may be that the assessee may show cause against the levy and ultimately the penalty may not be levied at all. Under those circumstances I am unable to agree with the contention of Mr. Swaminathan that the notice proposing the levy of penalty has to be understood as a notice of recovery of tax due and effectively understood as a process for collection and recovery of amounts under the Act. This is the view held in Mathew v. Second Additional Income-tax Officer, Kottayam, 1956 29 ITR 456 Trav.-Coch. Padmanabha Menon Krishna, Menon v. Commissioner of Income-tax, [1957] 32 I.T.R. 651 (Ker.), Kunhulaumma v. Income-tux Officer, Calicut, [1968] 68 I.T.R. 840 (Ker.) and Chhotey Lal v. Income-tax Officer, 1968 69 ITR 709. Consistently, it was held in all these cases that the provision for levying penalty no doubt occurs in Section 46 (of the old Act) which deals with the mode and time of recovery of tax. Except for this, there is no reason to hold that the levy of penalty is a mode of recovery of tax. The various modes for recovery of tax are provided in Section 46(2) (old Act) and the following sub-sections. Tax and penalty are always kept distinct in the Act and liability for penalty arises only when the payment of tax is not recovered, as demanded.