TaxTMI 
TaxTMI 
1961 (12) TMI 95
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....January 31, 1950. Under this assessment order no penal interest at all was levied against the petitioner. As the law stood at that time, it was obligatory upon the Income-tax Officer to have levied the penal interest against an assessee in case the conditions under section 18A(6) were satisfied. It may be noted that the fifth provost that section was introduced by the amending Act of 1953 only with effect from April 1, 1952. Under the said fifth proviso and rule 48, it became optional and discretionary with the Income-tax Officer to levy or not to levy penal interest. Prior to that, however, and on the date on which the assessment order was passed in this case, there was no option or discretion with the Income-tax Officer except to impose p....
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....nt of penal interest was reduced to a sum of Rs. 3,156. It is this amount of penal interest, the legality of which has been challenged by this writ petition. The notice appears to have been received by the petitioner on January 28, 1953, as the letter of the Income-tax Officer incorporating the revised demand is annexure "B" to the counter-affidavit filed by the Income-tax Officer and this letter bear the signature of Pitambar dated January 28, 1953. On March 28, 1956, the petitioner made an application asking the Income- tax Officer to explain to it the figures including the amount of Rs. 3,156, penal interest, which was included in the amount of Rs. 5,703-2-0 for which demand was issued in respect of the year 1945-46. The Income- tax Offi....
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....r imposition of penal interest a separate order was not necessary and it was sufficient that the interest was calculated and entered in the assessment form. Apart from this, it seems to me that, having regard to the mandatory requirement of section 18A(6) and there being no option in the matter with the Income-tax Officer, the liability for payment of penal interest could be created by calculation and entry in the assessment form. So far as this particular case is concerned, the Income-tax Officer having omitted to do his mandatory duty by imposing liability for penal interest under the original assessment order, he had recourse to the machinery of section 35 for rectification of the assessment order and after service of notice upon he peti....
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.... out that on the date on which the assessment order was made, namely, March 10, 1953, the fifth proviso to section 18A(6) had been introduced by the Amending Act of 1953 and the order under section 35 was also made subsequent to the introduction of the fifth proviso. Having regard to the provision in the newly introduced fifth proviso it was no longer the mandatory duty of the Income-tax Officer to impose liability for penal interest in every case. Under that proviso read with rule 48 of the Income-tax Act a discretion was vested in the Income-tax Officer to impose or not to impose a liability for payment of penal interest. Accordingly, when on March 10, 1953, the Income-tax officer did not impose liability for payment of penal interest, he....