Murari Mohan Dutt, J. - (1.) The petitioner is a company incorporated under the Indian Companies Act. The company is an assessee under the Income-tax Act and was assessed for the assessment year 1960-61 under Section 23(3) of the Indian Income-tax Act, 1922. The total income computed by the Income-tax Officer for the said assessment year is Rs. 6,91,067. The company preferred an appeal against the assessment order to the respondent No. 3, the Inspecting Assistant Commissioner of Income-tax, Range V. In the course of the proceedings before respondent No. 3, the company was served with a notice under Section 274(2) read with Section 271 of the Income-tax Act, 1961, for the assessment year 1960-61, as in the opinion of respondent No. 3, the company had concealed the particulars of its income or deliberately furnished inaccurate particulars of such income for the assessment year 1960-61. Thereafter, by his order dated February 24, 1967, respondent No. 3 imposed a penalty of Rs. 1,04,000 upon the company under Section 271(1)(c) of the Income-tax Act, 1961. Being aggrieved by the said order, the company preferred an appeal before the Income-tax Appellate Tribunal.
(2.) The company also moved an application before this court under Article 226 of the Constitution challenging the impugned order of penalty dated February 24, 1967, on the ground that the proceedings for the assessment year 1960-61 having been initiated and completed under the Income-tax Act, 1922, the penalty proceedings under the Income-tax Act, 1961, were not competent. On this application of the company, a rule was issued being Matter No. 104 of 1968, Bhartiya Steel and Engineering Co. (P.) Ltd. v. Income-tax Officer. The said rule came up for hearing before K. L. Roy J. on October 9, 1969, and on November 19, 1969. The counsel appearing for the income-tax department pointed out to the learned judge that since an appeal had also been preferred to the Tribunal against the order of penalty, the application under Article 226 was not maintainable in law. It may be stated here that at the time when the maintainability of the application had been challenged on behalf of the department, there were four unreported decisions of this court and two reported decisions, one of the Bombay High Court and the other of the Gujarat High Court holding that no penalty could be imposed under the provisions of the Income-tax Act, 1961, under Section 271(1)(c) read with Section 274(2) thereof, in respect of matters arising out of the assessment made under the provisions of the Income-tax Act, 1922. It is alleged that in view of the said High Court decisions, the company was advised to withdraw the appeal preferred by it before the Tribunal, so that there could be no question as to the maintainability of the application under Article 226 and the interest of the company would not also be prejudiced. The company made an application before the Appellate Tribunal praying for withdrawal of the appeal. The prayer portion of the application was to the following effect: "But now that the aforesaid matter in the hon'ble High Court would be coming up tomorrow for final hearing, we would be highly obliged if an order be made allowing us to withdraw the appeal." The Tribunal by its order dated December 2, 1969, allowed the company to withdraw the appeal. In consequence, the appeal was dismissed for non-prosecution.
(3.) At the hearing of the rule before this court, on behalf of the revenue reliance was placed on an unreported judgment of the Supreme Court in the case of Jain Brothers v. Union of India, since reported in 77 I.T.R. 107, wherein the Supreme Court considered the question of imposition of penalty under the Income-tax Act, 1961. It was held by the Supreme Court that the imposition of penalty was not illegal or invalid. The unreported decisions of this court as also the decisions of the Bombay and the Gujarat High Courts stood impliedly overruled by the said decision of the Supreme Court in Jain Brothers's case. In view of the said Supreme Court decision directly on the point, K. L. Roy J. dismissed the application of the company under Article 226 and discharged the rule. Thus the attempt of the company to get the same relief from this court on the basis of the said High Court decisions was foiled and the company did not get any opportunity to represent its case against the penalty on merits before the Tribunal.;