M.M.Dutt, J. - (1.) This rule is at the instance of the revenue and it is directed against the order of the Additional District Magistrate, 24-Parganas, cancelling the certificate issued by the Income-tax Officer, to the Tax Recovery Officer, 24-Parganas, for the recovery of the amount of penalty imposed on the opposite party, Raj Kumari Narendra Kumari, for her failure to pay advance tax for the quarter ended December 31, 1962, for the financial year 1962-63. The rule has been referred to the Division Bench by C.N. Laik J. for, in the opinion of the learned judge, it involves certain intricate questions of law.
(2.) The principal point that is involved in this rule is whether for the penalty levied on the assessee by the Income-tax Officer under Section 221 of the Income-tax Act, 1961, hereinafter referred to as the Act, a certificate can be issued under Section 222 of the Act for the recovery of the amount of penalty. The learned Additional District Magistrate is of the view that no penalty can be imposed under Section 221 for the failure of the assessee to pay advance tax and, as such, the question of its recovery under Section 222 of the Act does not arise. In that view of the matter, the learned Additional District Magistrate has, by the impugned order, cancelled the certificate and set aside the proceeding initiated by the Tax Recovery Officer. Hence, this rule.
(3.) The provisions for collection and recovery of tax are contained in Chapter XVII of the Act. That Chapter is divided into five parts, namely, parts A, B, C, D and K. Part C consists of Sections 207 to 219 and relates to advance payment of tax. Part D of the Chapter contains Section 220 to Section 236A and deals with collection and recovery. Under Section 218(1) of the Act, if an assessee does not pay on the specified date any instalment of advance tax that he is required to pay under Section 210 and does not, before the date on which any such instalment as is not paid becomes due, send under Sub-section (1) or Sub-section (2) of Section 212 an estimate or a revised estimate of the advance tax payable by him, he shall be deemed to be an assessee in default in respect of such instalment or instalments. Section 220, inter alia, provides as to when tax, otherwise than by way of advance tax, is payable, Then comes Section 221, which is as follows: "221. (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under Sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the Income-tax Officer may direct, and in the case of a continuing default, such further amount or amounts as the Income-tax Officer may, from time to time direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears: Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard : Provided further that where the Income-tax Officer is satisfied that the default was for good and sufficient reasons, no penalty shall be levied under this section. (2) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded.";