Penalty on unpaid penalty was not authorised under the Income-tax Act, 1922, and the order was set aside.

Under the Indian Income-tax Act, 1922, the statutory power to impose penalty did not extend to a further penalty merely because an earlier concealment penalty remained unpaid. Tax and penalty were treated as distinct concepts, and prior Kerala High Court authority was followed in holding that the Act did not authorise a penalty upon a penalty. The reference to "assessment" in Supreme Court authorities was understood only in a procedural sense and not as expanding penalty power. The impugned penalty order was therefore unsustainable and the assessee succeeded.

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Issues: Whether, under the Indian Income-tax Act, 1922, a penalty could be imposed for non-payment of an earlier penalty imposed for concealment of income and non-payment of advance tax.

Analysis: The relevant statute treated tax and penalty as distinct concepts. The prior decisions of the same court holding that the Act did not authorise a further penalty for non-payment of penalty were followed. The contrary view expressed by another High Court was not accepted, as the reference to "assessment" in the Supreme Court authorities was understood only to recognise that penalty proceedings may fall within the wider procedural sense of assessment and not to authorise a penalty upon a penalty.

Conclusion: The imposition of penalty for non-payment of penalty was not authorised and the impugned order could not stand, in favour of the assessee.

Final Conclusion: The appeal succeeded and the penalty order was set aside.

Ratio Decidendi: Under the Indian Income-tax Act, 1922, the statutory power to impose penalty did not extend to imposing a further penalty merely because an earlier penalty remained unpaid.

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