S C MAGAVI Vs. COMMISSIONER OF INCOME TAX
LAWS(KAR)-1966-8-4
HIGH COURT OF KARNATAKA
Decided on August 10,1966

S.C. MAGAVI, HAVERI Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, MYSORE Respondents


Cited Judgements :-

COMMISSIONER INCOME TAX GUJARAT VS. HIRALAL MOHANLAL SHAH [LAWS(GJH)-1967-7-20] [REFERRED]
COMMISSIONER OF INCOME TAX VS. MUKANDDAS VISHNUKUMAR [LAWS(RAJ)-1973-8-17] [REFERRED TO]
COMMISSIONER OF INCOME TAX MYSORE VS. S G MAGAVI [LAWS(SC)-1971-1-77] [REVERSED]
JAIN BROS VS. UNION OF INDIA [LAWS(DLH)-1969-2-17] [REFERRED]
COMMISSIONER OF INCOME TAX VS. TIWARI JHUMARLAL SARUPLAL [LAWS(RAJ)-1980-1-34] [REFERRED TO]


JUDGEMENT

Somnath Iyer, J. - (1.)IN this reference sought by the assessee under section 256(1) of the INcome-tax Act, 1961, the first question before us is, whether in a proceeding commenced by a notice under section 34 of the INdian INcome-tax Act, 1922 (which will be referred to as the "old Act"), a penalty can be imposed under section 271 of the INcome-tax Act, 1961 (which will be called the "new Act"). The second question is whether in an appeal before it the INcome-tax Appellate Tribunal has the discretion to say that no penalty "should be levied at all" under section 271(1)(a) of the new Act.
(2.)THE material facts may be briefly stated :
The assessee is an individual, and the assessment years are 1958-59, 1959-60 and 1960-61. There was an imposition of penalty by the Income-tax Officer both under section 271(1)(a) and section 271(1)(b) of the new Act. The Appellate Assistant Commissioner overturned the imposition made by the Income-tax Officer and there were six appeals preferred by the department to the Income-tax Appellate Tribunal. The Tribunal restored the penalties imposed by the Income-tax Officer. At the instance of the assessee, two questions are referred to this court, which read :

"(1) Whether, on the facts and in the circumstances of the case, and assuming that there was no reasonable cause for the failures of the assessee as referred to in section 271(1)(a) and 271(1)(b), the Income-tax Officer was right in applying the provisions of and imposing penalty under section 271 of the Income-tax Act, 1961 ?"

It should be observed that there is an imperfection in the language of the first question, and there is an accidental omission in the second. The first question, literally understood, asks us to say whether in a case where there is failure on the part of the assessee such as that to which clauses (a) and (b) of section 271(1) refer, a penalty could be imposed under section 271. So understood, there should be not the slightest difficulty in answering the question straightway in the affirmative, for if there are defaults to which clauses (a) and (b) of section 271(1) refer, it becomes plain that a penalty under section 271 is perfectly within the competence of the Income-tax Officer. But it is obvious that we should not too literally understand that question since it is admitted on both sides that the real question which it poses is whether an imposition of penalty under the provisions of the new Act in respect of defaults committed in the case before us was possible having regard to the language of sections 271 and 297 of the new Act.

(3.)IT is equally clear that the Tribunal intended in formulating the second question to ask us to decide whether it had discretion in a case falling within clauses (a) and (b) of section 271(1) to say that no penalty should at all be levied. But the second question refers to only clause (a) of section 271(1) and it is not disputed that the omission to allude to clause (b) is attributable to inadvertence.
We shall now proceed to address ourselves to the first question. It will be remembered that the assessment years with which we are concerned preceded April 1, 1962, and it is also to be gathered that a notice under section 34 of the old Act had been issued before the new Act came into force on April 1, 1962. The assessments in pursuance of such notice were all made after the new Act came into force.



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