DEVIPRASAD KEJRIWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that has been referred to us by the Tribunal under section 66 (1) of the Indian Income -tax Act, 1922, for our opinion runs as under :

(2.) THE question arises in these circumstances : The assessee is a Hindu undivided family and the assessment year in question is 1948 -49. A notice under section 18A (1) was served on the assessee on 9th June, 1947, calling upon the assessee to pay advance tax of Rs. 18,967 for the assessment year 1948 -49. The demand was based on the latest completed assessment which was for the year 1946 -47. Initially, the assessee submitted an estimate of income on September 20, 1947, according to which no tax was payable because there was a loss. On December 18, 1948, the assessee submitted a return declaring an income of Rs. 7,752 plus share income from various partnership firms. On the basis of that return which was filed on December 18, 1948, the assessment was made on a total income of Rs. 54,369 on March 23, 1949. This assessment, it appears, was required to be reopened twice under section 34 of the Indian Income -tax Act, 1922. On the first occasion during reassessment proceeding the total income was determined at Rs. 94,802 on November 24, 1952, while on the second occasion the assessment was made on a total income of Rs. 2,38,440 on March 1, 1958. The assessee went in appeal and the final income as determined by the Commissioner of Income -tax under section 33A was Rs. 1,95,440. It was felt that the assessee had furnished the estimate of tax payable by him which he knew or had reason to believe to be untrue and, therefore, a notice under section 18A (9) (a) read with section 28 (3) was issued to the assessee and the same was issued before the second reassessment was completed and after giving the assessee an opportunity of being heard as required by law, the Income -tax Officer levied a penalty of Rs. 2,000 on the assessee under section 18A (9) (a) read with section 28. The assessee, thereafter, appealed to the Appellate Assistant Commissioner against the levy of penalty but ejective the only contention that was urged before him, namely, that the penalty proceedings, having been started at the time of reassessment, were invalid. The assessee preferred an appeal to the Tribunal and it was contended on his behalf that the penalty proceedings under section 18A (9) (a) read with section 28 (3) were invalid because they were not initiated in the course of any proceedings in connection with regular assessment as required under section 18A (9) (a). The contention reliance was placed on the decision of this court in the case of Sarangpur Cotton . v. Commissioner of Income -tax and the decision of the Madras High Court in the case of M. RM. M. M. N. Natarajan Chetiar v. Income -tax Officer. It was also contended that in any case if there was any doubt in the interpretation of these crucial words occurring in section 18A (9) (a), the benefit of doubt should go to the assessee. The Tribunal rejected the contentions of the assessee. It took the view that having regard to the context in which the expression 'regular assessment' occur in section 18A (9) (a) and the general scheme and tenor of the section, that expression signified the assessment which determined the final liability as contrasted with advance assessment of tax levied by the department on the basis of the latest completed assessment or as estimated by the assessee according to his own record. The Tribunal distinguished the two decisions on which reliance was placed on behalf of the assessee on the ground that the expression 'regular assessment' which came up for consideration before this court and the Madras High Court had been used in the context of liability to pay interest either under section 18A (5) or section 18A (6) and the manner in which the expression has been interpreted by this court and by the Madras High Court in that context would not have any bearing on the question as to how the same expression should be interpreted in the context of section 18A (9) (a) of the Act. The Tribunal, therefore, held that the initiation of proceedings under section 34 for second reassessment was in accordance with law and penalty was properly levied on the assessee.

(3.) SECTION 18A (9), which calls for proper construction, so far as is material, runs thus :