Advance-tax default liability survives repeal as removal-of-difficulties order validly supports penalty enforcement.

Section 298 of the Income-tax Act, 1961 and the Income-tax (Removal of Difficulties) Order No. 2 of 1963 were treated as valid supports for enforcing penalty under section 273 in respect of a default committed under section 18A(3) of the 1922 Act after repeal. The Court followed the Supreme Court's prior declaration upholding section 298, applied section 6 of the General Clauses Act to preserve the accrued liability, and found that the removal-of-difficulties order filled a genuine enforcement gap without conflicting with the new Act. The discrimination challenge failed, and the retrospective commencement of the order was not considered prejudicial on the facts.

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Issues: Whether section 298 of the Income-tax Act, 1961 and the Income-tax (Removal of Difficulties) Order No. 2 of 1963 validly enabled penalty under section 273 of the Income-tax Act, 1961 for default committed under section 18A(3) of the Income-tax Act, 1922 after repeal of the old Act.

Analysis: The challenge to the validity of section 298 could not succeed because the Supreme Court had already upheld the provision, and the High Court was bound by that declaration of law. On the merits of the removal-of-difficulties order, the Court held that repeal of the old Act did not extinguish the liability already incurred for failure to furnish an advance-tax estimate or pay advance tax. The saving principle under section 6 of the General Clauses Act, 1897 preserved that liability in the absence of a contrary intention, and the new Act had not otherwise provided an effective mechanism to enforce it. The order was held to be within the scope of section 298 because it addressed a genuine difficulty in giving effect to the new Act and was not inconsistent with its provisions. The Court also rejected the contention of discrimination and treated the retrospective commencement of the order as not prejudicial in the facts of the case.

Conclusion: The penalty imposed under section 273 pursuant to the removal-of-difficulties order was upheld, and the writ petition failed.

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