Gualior Palace vs Commissioner of Income Tax

Anjaneyulu, J.—This is a reference at the instance of the assessee u/s 256(1) of the income tax Act, 1961 (''the Act). The Tribunal referred the following question for consideration of the Court in connection with the assessment year 1976-77:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the penalty imposed u/s 273(b) of the income tax Act, 1961, of Rs. 1,520 for the assessment year 1976-77?"

It is not in dispute that for the assessment year 1976-77 the assessee did not file an estimate of advance tax payable. Consequently, the assessee was called upon to show cause why penalty should not be levied. No reply to the show-cause notice was furnished to the ITO. Consequently, penalty of Rs. 1,520 was levied u/s 273(b) of the Act. The assessee appealed against the levy of penalty to the Commissioner (Appeals) unsuccessfully. A second appeal to the Tribunal met the same fate. The assessee then sought the present reference u/s 256(1).

The short contention urged before us by the learned counsel for the assessee is that at the relevant time when the penalty was levied on 20-3-1979 there was no provision like section 273(b). It is pointed out that there were certain amendments which became effective from 1-6-1978. Pursuant to those amendments, section 212(3) of the Act which was in existence till 1-6-1978 had been renumbered as section 209A(1) of the Act. Similarly section 273(b) which was in force prior to 1-6-1978 was numbered as section 273(1)(b). Having looked into the provisions, prior to the amendment and after the amendment, we find that they are practically the same except that there was a regrouping of the sections which took effect from 1-6-1978. Basically there is no difference in the obligations of the assessee to furnish an estimate of advance tax payable and the ingredients necessary for the levy of penalty for failure to furnish an estimate of advance tax. The contention that at the time when the order u/s 273(b) was passed, the section was numbered as section 273(1)(b) and that section 212(3) was renumbered as section 209A(1) does not, in our opinion, affect the power of the ITO to levy penalty. That apart, we find that the assessment year involved is 1976-77. The law that is applicable for the assessment year 1976-77 is the one that was in force at the beginning of the assessment year, viz., on 1-4-1976. In such circumstances, the ITO was justified in applying the provisions of law as were in force for the assessment year 1976-77 without taking note of the amendments which came into effect from 1-6-1978. Even though the order of penalty was passed on 20-3-1979 the ITO has to apply the provision of law as was in force on the first day of the assessment year 1976-77 or alternatively the provision of law in force when the default was committed. In that view also, the order of the ITO levying penalty is not liable to be questioned. We hold that the Tribunal was justified in sustaining the penalty imposed u/s 273(b). The question referred to us is, accordingly, answered in the affirmative, that is to say in favour of the revenue and against the assessee. No costs.