CEMENT DISTRIBUTORS PRIVATE LIMITED Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THE petitioner is a private limited company incorporated under the Indian Companies Act. It was an assessee formerly on the file of the Income-tax Officer, Special Investigation Circle " B", Madras, and now within the jurisdiction of the Income-tax Officer, Central Circle II, Madras-34, the 2nd respondent herein. For the assessment year 1959-60 (the previous accounting year ending with October 31, 1958) the petitioner submitted a return of a total income of Rs. 4,89,758. THE Income-tax Officer completed the petitioner's assessment under Section 23(3) of the Indian Income-tax Act, 1922 (hereinafter called "the old Act"), and would not accept the return of the petitioner and redetermined the total income of the petitioner at Rs. 8,10,980. He disallowed certain revenue expenditure claimed by the petitioner on the ground that there was no evidence of such incurring of expenditure and that the claim for deduction was not bona fide. While completing the petitioner's assessment on March 16, 1964, after the coming into force of the Income-tax Act of 1961 (hereinafter called " the new Act"), the Income-tax Officer initiated proceedings for levy of penalty by issuing a notice under Section 271(1)(c) of the new Act. THE Officer referred the subject under Section 274(2) of the new Act to the Inspecting Assistant Commissioner, the 1st respondent herein, who has issued the impugned notice under Section 274(2) read with Section 271(1)(c) of the new Act. In challenging the impugned notice, the petitioner claims that on merits there is no case for levy of penalty and that an appeal has been preferred against the original order of assessment which is now pending and that there is every chance of success in the appeal. Secondly, it is said that on a comparison of the provisions relating to the imposition of penalty under the old Act and the new Act, the petitioner has been discriminated since proceedings are initiated under the new Act for the imposition of penalty notwithstanding the fact that the petitioner's assessment relates to an assessment year anterior to 1st of April, 1962. THE discrimination complained of is said to He in the differential meted out to assessees similarly situated and similarly circumstanced by applying the provisions of Section 28 of the old Act in the case of some of the assessees and by applying the provisions of Section 271(1) to some others falling in the same group. THE contention as to the discrimination and the consequential affection of Article 14 of the Constitution of India is also rested on the ground that the present penal provisions under the new Act are more rigorous and in this sense the date line, " 1st of April, 1962 ", fixed for attracting the penalty provisions of the old Act in one case and the provisions of the new Act in the other case is artificial, arbitrary and leads to obvious discrimination. It is also urged that the provisions of Section 297(2(f) and (g) of the new Act laying down different modes of penalty for the same offence or contumacy are arbitrary, oppressive and clearly unjust and for these reasons the relevant provisions have to be held to be unconstitutional and void. THE more important ground of attack is that Section 297(2)(f) and (g) of the new Act read with Section 271(1) of the said Act are also repugnant to Article 20(1) of the Constitution of India. It is said that even assuming that the petitioner is guilty of concealment of income, in respect of which penalty is imposable, such penalty for an offence of concealment can be imposed only in accordance with the old Act and not under the provisions of the new Act, and in that respect it is said that Article 20(1) of the Constitution of India is violated. THE complaint is stated in the following terms:

(2.) THE first contention that the provisions of the new Act, as stated above, are violative of Article 14 of the Constitution of India is no longer tenable and it has been fairly conceded to be so in view of the pronouncement of the Supreme Court in Jain Brothers v. Union of India, . I am not, therefore, called upon to touch upon this contention. THE Supreme Court has said in that case that Section 297(2)(g) of the new Act does not offend Article 14 of the Constitution of India and Sections 271(1) and 297(2)(g) which have to be read together and worked in harmony do not offend any provision of the Constitution and the classification, even if any, made does not savour of discrimination.

(3.) ARTICLE 20 of the Constitution deals with an offence for violation of a law in force at the time of the commission of the act. Mr. Srinivasan's attempt is that the proposal to levy a penalty is also a process by which an assessee is sought to be convicted of an offence.