COMMISSIONER OF INCOME TAX Vs. VIJAYANTHIMALA SMT

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Madras Bench, under section 256(1) of the Income -tax Act, 1961, hereinafter referred to as "the Act", at the instance of the Commissioner of Income -tax (Central), Bombay, has referred the following question for the opinion of this court

(2.) THE facts lie within a very narrow compass. With reference to the assessment year 1969 -70, the assessee had to pay a sum of Rs. 96, 360 as advance tax. The second instalment of Rs. 24, 090 was payable on or before September 1, 1968. The assessee paid that amount actually on October 8, 1968. After the amount was paid, on October 17, 1968, the Income -tax Officer issued a notice to the assessee calling upon her to show cause why a penalty should not be levied on her. The assessee replied stating that since the amount had been paid on October 8, 1968, itself the penalty proceedings might be dropped. The Income -tax Officer held that the amount was due and payable on September 1, 1968, and that as the amount was paid on October 8, 1968, only, the assessee was liable to penalty under section 221 (1) of the Act. Accordingly, he imposed a penalty of Rs. 1, 200 Against the order of the Income -tax Officer, the assessee preferred an appeal to the Appellate Assistant Commissioner of Income -tax. The Appellate Assistant Commissioner set aside the order of penalty. He pointed out that under the relevant provisions of the Indian Income -tax Act, 1922, penalty was not being levied, if, on the date of the penalty, tax had been already paid, even though it was not paid on the due date and that in fact the Income -tax Officers were suo motu cancelling such penalties levied if it was proved that the tax had been paid before the date of the penalty order, though not on the due date, presumably under the departmental instructionsAgainst the order of the Appellate Assistant Commissioner, the department preferred an appeal to the Tribunal and the Tribunal dismissed the appeal. The Tribunal took the view that, on the date when the penalty was levied, the tax must be in arrears and that since in the present case the tax had already been paid even before the issue of the notice to show cause why penalty should not be levied, no penalty was leviable. It is the correctness of this conclusion of the Tribunal that is challenged in the form of the question extracted already in this reference Section 221(1) of the Act, on the relevant date, read as follows

(3.) UNDER section 218(1), as we have pointed out already, the assessee had to pay the instalment in question on or before September 1, 1968, and she actually paid the same only on October 8, 1968. Therefore, it is clear that the assessee did not pay the amount on the due date and paid it only later. The question for consideration is whether, in that context, the assessee had incurred any liability to penalty or not under section 221 of the Act. It is conceded by the learned standing counsel for the department that there is no direct decision on this point. Consequently, we have to construe the section in the light of the language employed thereinSince the assessee was not represented before us we requested Mr. K. R. Ramamani, advocate, to assist the court as amicus curiae and we have heard his arguments