Transitional penalty provisions under the Income-tax Act can extend to defaults under the repealed 1922 Act

Transitional provisions under section 297(2)(g) of the Income-tax Act, 1961 can bring defaults committed under section 18A(3) of the repealed Income-tax Act, 1922 within the penalty regime of section 273(b) of the 1961 Act. Applying the Supreme Court's interpretation, the High Court noted that penalties for defaults relating to the 1958-59 and 1959-60 assessment years were not excluded merely because the underlying default arose under the earlier Act. The assessee's further argument that section 273 applied only where assessment was completed on or after 1 April 1962 was not decided, as it did not arise from the Tribunal's order.

---

---

Issues: Whether penalties levied under section 273(b) of the Income-tax Act, 1961 could be sustained for defaults relating to the assessment years 1958-59 and 1959-60 under section 18A(3) of the Income-tax Act, 1922.

Analysis: The question turned on the transitional effect of section 297(2)(g) of the Income-tax Act, 1961. The Court held that, in view of the Supreme Court's ruling that section 297(2)(g) applies to defaults under section 18A of the repealed 1922 Act, section 273 of the 1961 Act is attracted to such cases. The assessee's further contention that the provision could apply only where the assessment was completed on or after 1 April 1962 was not decided, because that point did not arise from the Tribunal's appellate order and had not been adjudicated by it.

Conclusion: The question referred was answered in the negative, and the cancellation of penalties was not justified.

Final Conclusion: The reference was decided against the assessee on the applicability of the 1961 penalty provision to a default under the repealed 1922 Act.

Ratio Decidendi: Where the transitional provision so provides, a default committed under the repealed Income-tax Act, 1922 may attract the corresponding penalty provisions of the Income-tax Act, 1961.

---