Law:

Section:

Income-tax Act, 1922 -Section 2(9) (before amendment in 1963) Sections 2(19), 3, 18A(3), 28(1B) (as amended in 1959) -- Person -Definition of the word 'person' whether includes a 'firm' -Held yes -- Advance payment of tax -Charge created by Sec. 18A for advance payment of tax -Whether an obligation independent of Sec. 3 -Held yes -- Advance payment of tax -Firm -Penalty -Fialure to pay advance tax by a firm -Penalty, whether exigible -Held yes -- 'Person' includes a firm -Obligation to pay advance tax is created independently of section 3 - Default under section 18-A(3) punishable under section 28(1-B)(b) -- Imposition of penalty and penal interest are distinct matters -Penalty, 10% to 15% of maximum, not excessive -- Corresponding Sections: Income-tax Ordinance, 1979 -Sections 2(32), 9(1) -- ORDER {The order was passed by M.T. SIDDIQUI, Accountant Member}.---This appeal which relates to the assessment year 1959-60 objects to the imposition of a penalty of Rs. 3,382 on the ground of being illegal and in the alternative as excessive. 2. The appellant is a firm which declared an income of Rs. 1,22,955. This was finally assessed by the Income-tax Officer at Rs. 1,22,975 and a super tax demand of Rs. 18,973 was levied. Since the appellant failed to deposit tax in advance as required by the provisions of Section 18A(3) the Income-tax Officer issued a show-cause notice under the provisions of Section 28(3) and ultimately imposed a penalty of Rs. 3,382 under Section 28(1B)/18A(3). The appellant went before the Appelalte Assistant Commissioner but met with no success. 3. Before us the legality of the order imposing the penalty was agitated on three alternate grounds. In the first instance it was contended that under Section 18A(3) it is "person" not hitherto assessed who has to make the necessary deposit of tax in a stated and prescribed manner but the appellant being a "firm" was not covered by the definition of the word "person" as mentioned in Section 2(9) of the Income-tax Act. The second argument regarding the illegality of the penalty was raised on the ground that there was no provision in the Income-tax Act enabling the Income-tax officer to fix a charge for…

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