Composite penalty for multiple income-tax defaults upheld where no prejudice was shown and statutory limits were not exceeded.

A composite penalty for more than one default under the Indian Income-tax Act, 1922 was valid where the defaults arose in the course of assessment and were dealt with together. The statutory scheme did not require every default to be the subject of a separate penalty order in all cases, and the mere fact of joint consideration did not make the levy illegal. As no prejudice to the assessee was shown, and the penalty remained within the aggregate maximum exposure permitted by law, the levy was upheld against the assessee.

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Issues: Whether a composite penalty could validly be levied for more than one default under the Indian Income-tax Act, 1922.

Analysis: Penalty under the Act is part of the assessment machinery and is imposed in relation to defaults occurring in the course of assessment. The statutory scheme did not require every default to be dealt with only by a separate penalty order in all cases. The fact that two defaults were considered together did not, by itself, make the penalty illegal. In the present case, no prejudice to the assessee was shown, and the composite penalty imposed was within the aggregate maximum exposure available under the law.

Conclusion: The levy of a composite penalty was held to be valid and the issue was answered against the assessee.

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