KOTAK N N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assesses in this cage was assessed for the years 1944-45 and 1946-46. He failed to make the full payment in respect of his assessment for these years. THEreupon on 23 6 1948, the Income-tax Officer purported to pass an order to the following effect. "Tax not paid; Issue Penalty Notice." Pursuant to this order a demand was made for payment under Section 29 and the notice of demand mentioned what was the amount of penalty that the assessee had to pay. THE assesses appealed to the Appellate Assistant Commissioner from the order under Section 46 (1) and the Appellate Assistant Commissioner reduced the penalty. THEn there was an appeal to the Tribunal and the Tribunal upheld the decision of the Appellate Assistant Commissioner.

(2.) THE contention urged before the Tribunal and also before us is that the penalty imposed was contrary to law inasmuch as no proper order was passed by the Income-tax Officer under Section 46 (i). That sub-section provides that when an assessee is in default in making payment of income-tax the Income-tax Officer may in his discretion direct that in addition to the amount in arrears a sum not exceeding that amount shall be recovered from the assesses. It is clear that the direction that the Income-tax Officer has to give under Section 16 (1) must be a direction which must take the form of an order and that order must state the specific sum which the assessee hag got to pay by way of penalty. THE limitation laid down upon the Income-tax Officer under, that sub-section is that the amount which the assessee has to pay as penalty mast not exceed the amount of arrears.

(3.) INASMUCH as the order passed by the Income-tax Officer in this case under Section 46 (i) does not specify the amount of the penalty, the order is bad and the notice of demand is equally bad as it follows upon an invalid order of the Income-tax Officer. In the result the penalty imposed by the Income-tax Officer is not valid in law and we shall therefore answer the question referred to us in the negative. The Commissioner to pay the costs of the reference.