TaxTMI 
TaxTMI 
TaxTMI 
1966 (8) TMI 8
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....issioner overturned the imposition made by the Income-tax Officer and there were six appeals preferred by the department to the Income-tax Appellate Tribunal. The Tribunal restored the penalties imposed by the Income-tax Officer. At the instance of the assessee, two questions are referred to this court, which read : " (1) Whether, on the facts and in the circumstances of the case, and assuming that there was no reasonable cause for the failures of the assessee as referred to in section 271(1)(a) and 271(1)(b), the Income-tax Officer was right in applying the provisions of and imposing penalty under section 271 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in rejecting the view that the Tribunal has a discretion under section 271(1)(a) of the Income-tax Act, 1961, as to whether a penalty should be levied at all ?" It should be observed that there is an imperfection in the language of the first question, and there is an accidental omission in the second. The first question, literally understood, asks us to say whether in a case where there is failure on the part of the assessee such as that to which clauses (a)....
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.... the assessment year preceded April 1, 1962. Clause (c) made the provisions of the repealed Act applicable to a pending appeal, reference or revision petition. Clause (d), which has real materiality to the matter before us, reads: " 297. (2)(d).---Where in respect of any assessment year after the year ending on the 31st day of March, 1940,---- (i) a notice under section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed ; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly." Under clauses (f) and (g) the new and the repealed Acts were respectively made applicable to a proceeding for the imposition of penalty in respect of an assessment completed before Ap....
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....h section 297(2)(d)(i) becomes applicable, a penalty could be imposed under section 271 of the new Act in the exercise of the authority created by clause (g) of that sub-section. So, the argument before us surrounded the question whether clause (g) of section 297(2) of the new Act authorises the imposition of a penalty under section 271 of that Act, even in a case in which a notice under section 34 of the repealed Act was issued before the new Act came into force. While, according to Mr. Srinivasan appearing for the assessee, the imposition of a penalty was not possible either under the repealed Act or under the new Act, the stress of the argument maintained by Mr. Rajasekhara Murthy for the department was that there was clear power under section 271 of the new Act to impose the penalties which were imposed by the Income-tax Officer, arising out of clause (g), which, according to him, was a special provision in the new Act in regard to that matter. Now what is perfectly manifest from clause (d) of section 297(2) of the new Act is that proceedings in pursuance of a notice issued under section 34 of the repealed Act could be continued and disposed of only under the repealed Act, an....
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....nt is also what is possible under the provisions of the repealed Act. We do not accede to the argument advanced by Mr. Srinivasan that a proceeding which may be continued under clause (d)(i) in that way does not include a proceeding for the imposition of a penalty under section 28 of the repealed Act. The expression " proceedings in pursuance of such notice" is comprehensive enough to include a proceeding for the imposition of a penalty under section 28 of that Act. There is no justification for our placing upon that expression the narrow interpretation suggested. Mr. Rajasekhara Murthy appearing for the department was therefore right in asking us to say that, if, in cases of that description, the imposition of a penalty is not possible under section 271 of the new Act, it becomes clearly permissible under section 28 of the repealed Act. Now we shall proceed to consider whether, as contended by Mr. Rajasekhara Murthy, clause (g) of section 297(2) is a special provision about penalties, and so, supersedes the general provision in clause (d)(i). We were asked to say that clause (g) is a complete and exhaustive code on the subject of penalty, and that if that clause says that a pena....
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....n 139(2) or 142(1) or 143(2) or 148, the case did not fall within clause (a) or clause (b) of section 271(1) of the new Act, and so, the imposition of a penalty under that sub-section was impermissible. The other submission was that, since a penalty could be imposed under the new sub-section only if the satisfaction to which that sub-section refers was generated in the course of a proceeding under the new Act, and there was none, all the proceedings could only be under the repealed Act as enjoined by section 297(2)(d)(i), and that the exercise of power under section 271(1) was incompetent. The second submission raises a question which is not entirely free from difficulty. The Appellate Tribunal thought that the satisfaction to which section 271(1) refers is a satisfaction in the course of a penalty proceeding and not a satisfaction in the course of the proceedings for an assessment pursuant to a notice under section 34 of the repealed Act. So it came to the conclusion that if a penalty proceeding could be initiated and continued under the new Act and the satisfaction was derived in the course of such proceeding that there is justification for the imposition of a penalty, that sati....
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....t it does was not also refuted by Mr. Rajasekhara Murthy, who however asked us to depend upon clause (g) of that sub-section as a special provision superseding the general provision contained in clause (d)(i). In support of this postulate we were asked to say that a penalty could be imposed under section 271 not only for non-compliance with the provisions of the new Act to which that section refers, but also for non-compliance with the requirements of the corresponding provisions of the repealed Act. We do not find it possible to accede to this view. A provision like section 271 which authorises the imposition of a penalty has to be given the meaning which its language permits, and if that sub-section authorises the imposition of a penalty only for disobedience to or non-compliance with the provisions of the new Act, we should not find it possible to say that such penalty could be imposed even for non-compliance with the provisions of the repealed Act, without reading into that sub-section words which it does not contain. It is a familiar canon of interpretation of statutes that we should not read into a statutory provision something which it does not contain when the plain langu....
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....essary for Parliament to make a special provision, and, when properly understood, the provision in clause (g) has relevance to it. It is not necessary for us to examine whether it applies to any other matter, so long as we find it possible to say that it does not apply to a matter to which clause (d)(i) refers. That being so, the argument that our interpretation of clause (d)(i) would render clause (g) a superfluous and unmeaning statutory provision must be repelled. What we have said so far leads to the conclusion that in the case before us the imposition of a penalty was possible only under section 28 of the repealed Act, and not under section 271 of the new Act. Our answer to the first question, as understood by us, must therefore be in favour of the assessee. The second question asks us to say whether a penalty could not be levied at all under section 271(1)(a). We have already observed that it was by some accidental omission that clause (b) of that sub-section was omitted from that question. But what is however clear is that our answer in respect of clause (a) would also be an answer covering clause (b). What is plain is that the question which we are required to answer pres....