Law:

Section:

Section 222 of the Income-tax Act, 1961 [Corresponding to section 46(2) of the Indian Income-tax Act, 1922] - Collection and recovery of tax - Certificate proceedings - In course of assessment, ITO having found that petitioner/assessee had deliberately concealed a large portion of his income, imposed penalty under section 28(1)(c) of 1922 Act - On appeal, Assistant Commissioner set aside order of penalty - Amount of penalty already paid by petitioner was therefore adjusted against his tax liability for year 1952-53 - Subsequently, Tribunal set aside order of Assistant Commissioner cancelling penalty - Department took view that original demand for penalty got revived and since amount paid by petitioner had been adjusted towards his tax arrears he became liable to pay same, and issued a certificate under section 46(2) of 1922 Act - Whether having regard to fact that certificate issued under section 46(2) of 1922 Act was not within time, it was not valid and was hit at by section 46(7) of 1922 Act and, consequently, it was to be quashed - Held, yes FACTS The petitioner assessee's was doing business in ground-nuts. He submitted a return for the year 1946-47. During the course of assessment in the year, it was found that he had deliberately concealed a large portion of his income. Taking all the circumstances into consideration, the Income-tax Officer estimated his income at Rs. 60,550. Thereupon, by an order the Income-tax Officer imposed penalty of Rs. 10,000 on the petitioner under section 28(1)(c) of 1922 Act. The Assistant Commissioner allowed petitioner's appeal on the ground that he was not given opportunity of being heard. The order of penalty was therefore set aside. By reason of the order of the Commissioner, cancelling the penalty, imposed on the petitioner, the petitioner became entitled to the refund of the said amount. The amount was, however, adjusted against the tax liability of petitioner for year 1952-53. For unpaid amount of tax a certificate under section 46(2) of 1922 Act was issued. The Tribunal, having set aside the order of the Appellate Assistant Commissioner cancelling the penalty, the Department took the view that the original demand for…

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