COMMISSIONER OF INCOME-TAX CENTRAL Vs. NATIONAL EXHIBITORS

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Chandigarh Bench, has referred the following two questions of law for our opinion :

(2.) THE assessment year in question is 1961-62. A notice was issued under Section 22 (2) of the Indian Income-tax Act, 1922 (hereinafter referred to as " the 1922 Act"), which was served on 26th July, 1961, asking the assessee-firm, Messrs. National Exhibitors, Amritsar, to file their return. The return was due in terms of the notice by 30th August, 1961, but it was filed on the 4th November, 1963. The assessment was completed on 25th March, 1965, on a total income of Rs. 82,062. As the return had not been filed in time, the Income-tax Officer issued a notice under Section 274 of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"), calling upon the assessee to show cause why penalty under Section 271 (1) (c) of the 1961 Act should not be imposed. After considering the assessee's reply to the show-cause notice, the Income-tax Officer held that a default had been committed which was punishable under Section 271 (I) (c) of the 1961 Act. He calculated the penalty under Section 271 (1) (ij of the 1961 Act and imposed a penalty of Rs. 19,142, being 50 per cent, of the tax which would be payable by the firm. On appeal, the Appellate Assistant Commissioner reduced the penalty by Rs. 8. On a further appeal to the Tribunal, the Tribunal adopted a curious course. It levied the penalty up to 1st April, 1962 (the day on which the 1961 Act came into force) under the 1922 Act and for the default after 1st April, 1962, under Section 271 (1) (a) of the 1961 Act. The net result was that a sum of Rs. 15,500 was imposed as penalty by the Tribunal instead of Rs. 19,134 as reduced by the Appellate Assistant Commissioner. The department being dissatisfied moved the Tribunal for a reference under Section 256 (1) of the 1961 Act and that is how the aforesaid two questions of law have been referred for our opinion.

(3.) AFTER hearing the learned counsel for the parties, we are of the view that both these questions must be answered in the affirmative, that is, in favour of the department and against the assessee. This has to be so in view of the Supreme Court decisions in Jain Brothers v. Union of India, [1970] 77 I. T. R. 107 (S. C) and Commissioner of Income-tax v. Singh Engineering Works (P.) Ltd. , [1970] 78 I. T. R. 90 (S. C.)