DIXIT,J. - (1.) THIS consolidated reference by the Income -tax Appellate Tribunal, Bombay, at the instance of the assessee, Kishanlal of Baghana, Neemuch, arises out of the Tribunals common order dismissing two appeals relating to the assessment years 1960 -61 and 1961 -62 preferred by the assessee. The Tribunal upheld the order of the Income -tax Officers order, imposing penalty on the assessee for his failure to file returns under section 22 (1) of the Indian Income -tax Act, 1922, withing 65 days of the publication of public notices under that section. The two questions which have been placed before us for decision are : '1. Whether, on the facts and in the circumstances of the case, the Tribunal acted rightly in upholding the application of section 297(2)(g) read with sections 271(1)(a) of the Income -tax Act, 1961, for the delay in the submission of returns for the assessment years 1959 -60 and 1960 -61 ? (sic). 2. In the event of question No. 1 being answered in the affirmative, whether on the facts here, and on a proper interpretation of section 271(1), the penalty levied has been properly computed ?'
(2.) FOR the assessment year 1960 -61 the assessee filed his return on 20th March, 1962. The assessment for that year was completed on 20th September, 1962. He filed his return on 31st March, 1962, for the next assessment year, namely, 1961 -62. The assessment for that year also was completed on 20th September, 1962. Admittedly, the returns for these two assessment years were not filed within time by the assessee. Consequently, the Income -tax Officer imposed on the assessee a penalty of Rs. 10,600 under section 271(1)(a) of the Income -tax Act, 1961, for his failure to file in time the return for the assessment year 1960 -61. The penalty was imposed after complying with section 274 of the 1961 Act. Similarly, a penalty of Rs. 4,000 was imposed on the assessee for his failure to file in time the return for the assessment year 1961 -62. The Income -tax Officer rejected the contention of the assessee that if he had not filed the returns in time, then penalty should have been imposed under section 28 of the Income -tax Act, 1922, and not under the 1961 Act. The contention was repeated unsuccessfully before the Appellate Assistant Commissioner and the Appellate Tribunal and the appeals preferred by the assessee were dismissed by the Appellate Assistant Commissioner and by the Tribunal. The material provisions to be considered while answering the questions referred are section 297(2) (a) and (g) and section 271(1) of the 1961 Act and section 28 (1) of the 1922 Act. Sub -section (1) of section 297 repeals the 1922 Act. Then sub -section (2) enumerates the 'savings'. That sub -section, so far as it is material here, is as follows : '(2) Notwithstanding the repeal of the Indian Income -tax Act, 1922 (XI of 1922) (hereinafter referred to as the replaced Act), - (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed;.... (g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier year, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act;....'
(3.) THE material portion of section 271(1) runs thus : '271. (1) Failure to furnish returns, comply with notices, concealment of income, etc. - If the Income -tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person - (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub -section (1) of section 139 or by notice given under sub -section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub -section (1) of section 139 or by such notice, as the case may be, or (b) has without reasonable cause failed to comply with a notice under sub -section (1) of section 142 or sub -section (2) of section 143, or (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - (i) in the cases referred to in clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which default continued, but not exceedings in the aggregate fifty per cent. of the tax.....' ;