R CHANDRASEKARAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE two references can be taken together for consideration as the point raised is identical. The two assessees are the two partners of a firm known as "M/s. Gopalakrishnan and Bros." The partners were not served with a notice under section 22(2) of the Indian Income-tax Act of 1922. They did not, however, comply with the requirements of a public notice issued under section 22(1) of the Indian Income-tax Act of 1922 which was in force in the relevant years. The Income-tax Officer issued a notice under section 148 of the Income-tax Act of 1961 which had come into force on 1st of April, 1962.

(2.) THE two assessees filed returns for both the assessments years, i.e., 1960-61 and 1961-62, on 21 st February, 1966, in pursuance or such notice under section 148 of the Income-tax Act, 1961. THE Income-tax Officer completed the reassessment and levied penalties in accordance with the provisions of the Act of 1961. Taking the case of Gopalakrishnan as typical of the two cases, the amounts of penalty levied were Rs. 2, 370 and Rs. 2, 823, respectively THE two assessees appealed to the Appellate Assistant Commissioner, who cancelled the penalty on the ground that penalty could not be imposed under the provisions of the Act of 1961 when default had taken place under the Act of 1922. If it should be held that penalty should be levied on the assessees for defaults under section 22(1) of the Act, the Appellate Assistant Commissioner held that the reasonable penalty would be Rs. 500 and Rs. 750, respectively. THE department appealed to the Tribunal and there were cross-objections by the assessees. THE Tribunal held that the assessments in these cases having been completed under section 297(2)(d)(ii), it would be legal and correct to impose a penalty under the provisions of the new Act. THE Tribunal confirmed the levy of penalty taking the date of default in the manner done by the Income-tax Officer, i.e., from the date when the returns were due under the public notice issued under section 22(i) of the Indian Income-tax Act, 1922. At the instance of the assessees the following questions have been referred "(i) Whether, in the circumstances of the case, the levy of penalty for 1960-61 and 1961-62 under section 271(1)(a) of the Income-tax Act of 1961 is valid ?(ii) If the answer to the first question is in the affirmative, whether for fixing the amount of penalty the period of default prior to April 1, 1962, could be taken into account." *THE questions in both the cases are identicalAs this is a case in which the proceedings have been taken under section 147 of the Act of 1961, section 297(2)(d)(ii) applies with the result that all the provisions of the Act of 1961 apply to such reassessment.