RAMESHWAR PERSHAD Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE assessee-applicant has not appeared to argue this petition nor has any counsel appeared on his behalf. This case has been on the daily list since August, 1972, and in spite of that the applicant has not made any arrangement for the prosecution of this petition. Consequently, we have heard the learned counsel for the revenue in order to answer the question referred to us for decision.

(2.) THE assessee was issued a notice of demand under Section 156 of the Income-tax Act 1961 (hereinafter called "the Act"), for the payment of advance tax under Section 210 of the Act in Form No. 28 in pursuance of the order of the Income-tax Officer dated July 28, 1967. The notice was served on the assessee on September 4, 1967. The first instalment of Rs. 8,129 was due on December 1, 1967, and the second instalment of similar amount was due on March 15, 1968. The first instalment of Rs. 8,129, which fell due on December 1, 1967, was not paid by the assessee and notice under Section 221 (1) of the Act was issued to him on December 15, 1967, requiring him to show cause on December 26, 1967, as to why penalty be not imposed for non-payment of the amount of Rs. 8,129. The notice was served upon the assessee on January 4, 1968, but the instalment of Rs. 8,129 was not paid by him even after the service of the show-cause notice nor any written explanation was submitted for nonpayment of Rs. 8,129. Another show-cause notice was issued to him on February 24, 1968, for March 6, 1968, and was served upon the assessee on February 27, 1968, but he neither gave any reply nor paid the amount. The assessee was consequently held to be an assessee in default under Section 218 of the Act and a penalty of Rs. 812, being 10 per cent. of the amount in default, was imposed by order dated March 6, 1968. The assessee filed an appeal which was rejected by the Appellate Assistant Commissioner of Income-tax on October 15, 1969. The assessee then filed an appeal before the Income-tax Appellate Tribunal which was dismissed on March 23, 1971. On the application of the assessee made under Section 256 (1) of the Act, the Income-tax Appellate Tribunal has referred the following question of law to this court for opinion :

(3.) THE only point argued before the Appellate Assistant Commissioner of Income-tax and the Income-tax Appellate Tribunal was that advance tax was not " tax " as defined in Section 2 (43) of the Act and, therefore, the assessee could not be deemed to be an assessee in default and no penalty could be imposed under Section 221 of the Act. The learned Tribunal relied on a Division Bench judgment of the Mysore High Court in S. Narayanappa and Brothers v. Income-tax Officer, [1959] 37 I. T. R. 257 (Mys.) which was a case under the Indian Income-tax Act, 1922, wherein it was held that penalty under the provisions of Section 46 (1) and (1a) of the Indian Income-tax Act, 1922, could be levied on an assessee who committed default in the payment of advance tax demanded under Section 18a of that Act. A Division Bench of the Allahabad High Court considered this matter in Smt. Kusum Kumari v. Union of India, [1972] 85 I. T. R. 19, 22, 23 (All.) and held that penalty could be imposed under Section 221 of the Act on an assessee who committed default in payment of advance tax. The relevant observations are as under :