COMMISSIONER OF INCOME-TAX, DELHL (CENTRAL) NEW DELHI vs. M/S. SINGH ENGINEERING WORKS (P) LTD. KANPUR

TAX REFERENCE CASE No. 1/1969Supreme Court[1971] 1 S.C.R. 76911 August 1970Bench: 3 JudgesAuthor: J.C. SHAH, K.S. HEGDE, A.N. GROVER B4 pages
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What did the Supreme Court hold?

The Supreme Court held that Section 212 of the 1961 Act corresponds to Section 18A(2) of the 1922 Act, and Section 273 of the 1961 Act corresponds to Section 18A(9) of the 1922 Act. The Court found that Section 297(2)(g) of the 1961 Act is applicable to the present case because the assessment was completed on or after April 1, 1962. This provision allows for the initiation of penalty proceedings and imposition of penalty under the new Act for assessments completed after April 1, 1962, even if the default occurred under the old Act. The Court followed its decision in M/s. Jain Bros. & Others v. Union of India, stating that the provisions of Section 273 of the 1961 Act would apply mutatis mutandis to penalty proceedings initiated in accordance with Section 297(2)(g). Therefore, penalties could be imposed under the 1961 Act. The question referred to the Court was answered in the affirmative, in favour of the Commissioner of Income-tax.

What were the facts?

The assessee, M/s. Singh Engineering Works (P) Ltd., was required to pay advance tax for assessment years 1960-61 and 1961-62 under Section 18A of the Income-tax Act, 1922. The assessee filed its own estimates and paid advance tax. Subsequently, the assessee filed returns declaring higher incomes. The Income-tax Officer completed the assessments on January 21, 1963, after the Income-tax Act, 1961, came into force. The ITO found the estimates to be inaccurate and imposed penalties under Section 273 of the 1961 Act. Appeals to the Appellate Assistant Commissioner were rejected. The Appellate Tribunal held that penalties could not be imposed under the 1961 Act, as the default under the 1922 Act could not be treated as a default under the 1961 Act, and Section 297(2)(g) of the 1961 Act did not save these proceedings. The matter was referred to the Supreme Court.

What were the issues?

1. Whether the default under Section 18A of the Income-tax Act, 1922, can be treated as a default under Section 212 of the Income-tax Act, 1961, for the purpose of imposing penalty under Section 273 of the 1961 Act, when the assessment was completed after April 1, 1962? 2. Whether Section 297(2)(g) of the Income-tax Act, 1961, saves proceedings for the imposition of penalty initiated under the 1922 Act but completed under the 1961 Act? Assessee's Contentions (as per Tribunal's reasoning): The default under Section 18A of the 1922 Act could not be treated as a default under Section 212 of the 1961 Act in the absence of a specific deeming provision in the new Act. Section 297(2)(g) of the 1961 Act did not save the proceedings under Section 18A of the 1922 Act. Revenue's Contentions: The revenue contended that Section 297(2)(g) of the 1961 Act, read with Section 273, allowed for the imposition of penalty under the new Act for defaults committed under the old Act, provided the assessment was completed after April 1, 1962. The revenue relied on the Supreme Court's decision in M/s. Jain Bros. & Others v. Union of India.

Which sections of the Income-tax Act were involved?

Section 18A,Section 212,Section 273,Section 297(2)(g),Section 257

AI-generated summary — verify with the full judgment below

A B c D E F G 7ti9 COMMISSIONER OF INCOME-TAX, DELHl (CENTRAL) NEW DELHI v. M/S. SINGH l!:NGlNEERING WORKS (P) LTD. KANPUR Aug.ust 11, 1970 (J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.j ftlcome-tax Act \43 of 1961), ss . . 212, 273 and 297 (2)(g)-Proceed- ingl' under s. 18-A of the 1922-Act-Assessinent; cornpleted after 1st April l~b2-lmposition of penalty under 1961 Act-Validity.

The asse~see was req!.lired under s. l8A( I) of the lncom~·tai. Act, 1922, tc make advance payments of tax for asse;sment years 1960-61 and 1961-62. The assessee made his own estimates of the tax for the two yl.!ars and paid the amounts.

But th:::n the assessee filed returns of income for the two years, the Income-tax. Officer assessed the total income of the assessee on January 21, 1963, at much higher figures for the two yi:u.rs, and held that the assessee furnished inaccurate and untru~ estimates of lax and imposed penalties under s. 273 of the 1961-Act. The Tribunal held that the penalties could not bo imposed, because, ( 1) the default under s. !SA of the 1922-Aot cuuld not be treated as a default under tho l9t>l Act; and (2) s.297(2)(g) of the 1961-Act did not Sa\<: th

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