COMMISSIONER OF INCOME TAX Vs. SETH PURAN CHAND

JUDGEMENT

(1.) THE assessee is an HUF. It was a partner in a firm called the Kundan Sugar Mills. In respect of the asst. yr. 1962-63 it did not pay the income-tax assessed against it and for non-payment of the tax the ITO imposed upon it a penalty under S. 221 of the IT Act, 1961 (hereinafter referred to as the Act). The quantum of penalty was modified in appeal. On second appeal before the Tribunal it was contended that no penalty in law could be imposed under S. 221, because that section did not mention the authority who was competent to levy the penalty. Following an earlier decision of this Court in Smt. Kusum Kumari vs. Union of India (85 ITR 19), the Tribunal upheld this contention. In the case of Kusum Kumari this Court had held that S. 221 before its amendment by the Taxation Laws (Amendment) Act, 1970 did not prescribe the authority which was empowered to levy penalty under that section and the amendment was not retrospective as it operated only from 1st April, 1971. At the instance of the CIT the Tribunal has referred the following question of law for the opinion of this Court :

(2.) A Full Bench of this Court in the case of D.C. Puliani vs. CIT, Luncknow (89 ITR 164) has over- ruled the decision in Kusum Kumari's case and has held that even before the amendment, S. 221 empowered the ITO to levy a penalty. In these circumstance the Tribunal was not right in cancelling the penalty.