COMMISSIONER OF INCOME TAX Vs. VENILAL DWARKADAS MEHTA

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal under Section 256(1) of the Income-tax Act of 1961 (hereinafter referred to as "the Act"), of the following question at the instance of the revenue:

(2.) THE assessee was served with notices of demand for four assessment years, being assessment years 1962-63 to 1965-66, demanding the amounts specified in the respective demand notices on December 7, 1965. THE total demand for these four years was Rs. 17,680. THE assessee received the demands on the same day, but omitted to satisfy the demands within 35 days of the service of the demand notices. He also did not ask for any extension of time. He filed appeals against the demands, but did not apply to the Income-tax Officer for stay of collection of the demands. A notice was issued on Februarys, 1966, by the Income-tax Officer asking the assessee to show cause on February 17, 1966, as to why the penalty may not be levied for non-payment of the tax demands. THE assessee omitted to appear that day, but came before the Income-tax Officer on March 21, 1966, and alleged that the advance tax paid by him had not been adjusted while computing the tax amount in respect of each of the years in question. THE Income-tax Officer issued a consolidated challan to the assessee for payment of Rs. 8,000 on March 21, 1966. On that very day the assessee paid the amount. On the following day, that is, March 22, 1966, the Income-tax Officer imposed penalties on the assessee to the tune of Rs. 9,000 for the various years. THE assessee appealed against the levy of penalty and the Appellate Assistant Commissioner while holding that the assessee was liable for penalty, reduced the same by Rs. 5,500. A total penalty of Rs. 3,500 was thus sustained in first appeal. THE assessee carried further appeals to the Tribunal and contended that on the date when penalties were levied, there was no outstanding demand against him ; the assessee had a co-operating attitude with the department; the assessing officer did not consider the claim of refund due to the assessee ; did not adjust the advance tax paid by him and, therefore, imposition of penalty was improper, arbitrary and illegal.

(3.) OUR answer to the question referred to above shall be that, in the facts and circumstances of the case, the penalty imposed by the Income-tax Officer on the assessee under Section 221(1) of the Act was not validly imposed. The assessee shall have his costs. Hearing fee, rupees one hundred.