TaxTMI 
TaxTMI 
1974 (1) TMI 8
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....e undisclosed income of the petitioner for the assessment years 1963-64 and 1964-65, before respondent No. 2, Additional Commissioner of Income-tax, West Bengal II. The said disclosure was accepted by the Commissioner of Income-tax with slight modification of the amount disclosed and on receipt of the said information, the Income-tax Officer served upon the petitioner a demand notice under section 156 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), on January 13, 1966, for Rs. 4,12,677.80 requiring the petitioner to pay the whole of the aforesaid amount within 35 days of the service of the said notice. The petitioner paid Rs. 41,267 being 10 per cent. of the total demand and made a written prayer on January 17, 1965, f....
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....e Income-tax Officer dated November 25, 1970. By an order dated March 3, 1971, the Additional Commissioner of Income-tax, West Bengal II, rejected the petitioner's said application. The said order was communicated to the petitioner by a letter, dated March 24, 1971. Thereafter, the petitioner received a notice dated April 2, 1971, issued under section 221(1) of the Act by the Income-tax Officer, whereby the said Income-tax Officer asked the petitioner to show cause why a penalty should not be levied under the said section for not paying the said amount of interest amounting to Rs. 44,463 under sections 220(3) of the Act. The petitioner being aggrieved by the said notice of demand dated November 25, 1970, passed under section 220(2) of the A....
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....een laid down and unless those conditions are fulfilled, the Income-tax Officer has no authority to grant any instalment to the assessee under sub-section (3) of section 220 of the Act. There is no provision in the Finance (No. 2) Act of 1965 by which the power has been conferred upon the Commissioner of Income-tax to grant any instalment, but by virtue of the deeming clause as provided in the proviso to sub-section (7)(a) of section 24 of the Finance (No. 2) Act of 1965, the Income-tax Officer shall be deemed to authorise to extend the time limit for payment of the tax due or allowing payment in instalments unless the conditions laid down in the said proviso are fulfilled. It is not disputed in the instant case that the entire amount speci....
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....sessee a notice of demand in the prescribed form specifying the sum so payable. " I have already found that interest is payable under sub-section (2) of section 220 of the Act with respect to any disclosure made under Finance (No. 2) Act of 1965 and in the instant case an order under sub-section (2) of section 220 of the Act had been passed by the Income-tax Officer on November 25, 1970, which is annexure " D " to the petition. When interest is payable in consequence of an order passed under the Act, the provisions of section 156 of the Act are automatically attracted and for that reason no further reference to section 156 has been made in the Finance (No. 2) Act of 1965, for issuing any demand notice for payment of interest. Lastly, ....
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....ct. The Supreme Court observed that there is nothing to show that it is to be treated as tax, and it thus retains its character of interest but it is recoverable along with the tax. Indeed section 29 of the Indian Income-tax Act, 1922, makes a distinction between penalty and interest. In another decision, P. S. Subramanyan, Income-tax Officer v. Simplex Mills Ltd., the Supreme Court held that penal interest chargeable under the provisions of the Income-tax Act was not a tax payable by the assessee. Therefore, in view of the above two decisions of the Supreme Court, " tax " and " interest " are different and distinct in character. Under sub-section (1) of section 221 of the Act, penalty can be imposed only when the assessee is in default ....