COMMISSIONER OF INCOME-TAX Vs. P B HATHIRAMANI

JUDGEMENT

(1.) THIS reference made under section 256 (1) of the Income-tax Act, 1961, at the instance of the revenue, in respect of the assessment years 1963-64, 1964-65 and 1968-69 the following question for the opinion of this court :

(2.) DURING the assessment years to question, the Inspecting Assistant Commissioner levied penalties of Rs. 7,000, Rs. 21,000 and Rs. 14,000 respectively, under section 271 (1) (c) of the act by orders made on December 31, 1973. The assessee appealed against these orders. During the pendency of the assessee's appeals against the said penalty orders, the Income-tax Officer required the assessee to pay the outstanding amounts of penalty. By orders made in October 17, 1974, holding that the assessee had committed default in payment of the outstanding demands, be levied penalties of Rs. 1,000, Rs. 2,000 and Rs. 2,000 respectively, for the three assessment years in exercise of his power under section 221 (1) of the Act. The assessee's appeals to the appellate Assistant Commissioner failed. The Tribunal noticing that the expression "tax" has been separately defined in section 2 (43) of the Act and also relying on a judgment of the calcutta High court in Shreeniwas and Sons v. ITO (1974) 96 ITR 562, cancelled the penalties levied under section 221 (1) of the Act. On the application of the Department, the aforesaid question has been referred by the Tribunal to this court.

(3.) SECTION 22 (1) of the Act, as it stood at the material time, reads as under :