1981 (11) TMI 25 - HC - Income Tax

Court rules reassessment under s. 147 /= regular assessment under s. 143/144 for penalty purposes.

The court dismissed the appeal challenging a penalty notice issued under s. 273 of the I.T. Act, 1961, based on reassessment under s. 147. It held that ... Regular assessment - reassessment under section 147 - statutory definition in the interpretation of taxing statutes - application of machinery provisions - separate treatment of assessment and reassessment in the ActRegular assessment - reassessment under section 147 - statutory definition in the interpretation of taxing statutes - Whether the words 'regular assessment' in section 273 of the Income-tax Act, 1961 include a reassessment made under section 147. - HELD THAT: - The Court held that 'regular assessment' must be read in light of the specific definition in section 2(40), which defines it as assessment made under sections 143 or 144. Sections 147 and 148 confer an independent power of assessment/reassessment and section 148 only makes the other provisions of the Act apply 'so far as may be' to the procedure of reassessment. Other provisions (for example sections 153, 246(1) and 263) separately distinguish assessments under ss. 143/144 from reassessments under s. 147, demonstrating that reassessment is a distinct species. The mere availability of assessment machinery does not assimilate a s. 147 reassessment to a 'regular assessment' under s. 143/144. Consequently, in the context of s. 273 the words 'regular assessment' do not include reassessment under s. 147.The words 'regular assessment' in section 273 do not include a reassessment under section 147; penalty under s. 273 cannot be predicated solely on proceedings in a reassessment under s. 147.No two orders for the same default - double penalty - Validity of the contention that a fresh notice of penalty is precluded because a prior penalty in respect of the same default has already been sustained. - HELD THAT: - The Court noted the Revenue's additional contention that successive penalty proceedings would amount to imposing two penalties for the same omission and that the earlier penalty having been sustained would invalidate the later notice. The Court did not decide this contention on merits, observing that in view of its primary conclusion on the construction of 'regular assessment' it was unnecessary to examine this argument further.Left undecided by the Court for determination in appropriate proceedings; the point was not adjudicated.Final Conclusion: Appeal dismissed; the Court concluded that 'regular assessment' in section 273 refers to assessments under sections 143 or 144 and does not include reassessments under section 147. The challenge to the notice of penalty on that ground fails; the additional contention about double penalty was not decided. Respondent entitled to costs. Issues involved: Appeal against order of penalty under s. 273 of the I.T. Act, 1961 for under-estimating profits while paying advance tax; Challenge of penalty notice issued under s. 273 based on reassessment under s. 147 of the Act.Summary:The appeal concerned the challenge of a penalty notice issued under s. 273 of the I.T. Act, 1961, based on reassessment under s. 147 of the Act. The court considered whether the reassessment under s. 147 could be equated with a 'regular assessment' under s. 143 or s. 144 for the purpose of imposing a penalty under s. 273. The appellant relied on a previous court decision to argue that reassessment should be considered a regular assessment. However, the court held that the provisions of the Act clearly distinguish between regular assessment and reassessment. The court pointed out that s. 148 specifically refers to assessment, reassessment, or recomputation under s. 147 as distinct from assessments under s. 143 or s. 144. Additionally, other provisions of the Act, such as time limits for assessments and appeals, treat reassessment under s. 147 separately. The court emphasized that the term 'regular assessment' in s. 273 should not be interpreted to include reassessment under s. 147 based on the legislative definitions and canons of construction.The court also noted that previous decisions by various High Courts supported the interpretation that reassessment under s. 147 should not be considered a regular assessment for the purposes of s. 273. The court dismissed the appeal, upholding the decision to quash the penalty notice issued based on reassessment under s. 147. The respondent was awarded costs for the appeal.