Judgment

HEGDE, J. :- This appeal by certificate arises from the decision of the Calcutta High Court in a case stated by the Income-tax Appellate Tribunal B Bench, Calcutta. After setting out the relevant facts, the Tribunal solicited the opinion of the High Court on the following question of law :

"Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that in calculating the penalty leviable under Section 271 (1) (a) (i) of the Income-tax Act, 1961 the amount paid by the assessee under the provisional assessment under Section 23-B of the Indian Income-tax Act, 1922, was to be deducted from the amount of tax determined under Section 23 (2) of that Act in order to determine the amount of tax on which the computation of the penalty was to be based and in reducing the amount of the penalty imposed on the assessee to Rupeees 2,737/-."

2. The High Court answered that question in the affirmative and in favour of the assessee. Aggrieved by that decision, the Commissioner has brought this appeal.

3. Let us now proceed to state the facts relevant for deciding the point in issue, as could be gathered from the statement of the case.

4. In this case we are concerned with the assessee s assessment for the assessment year 1960-61, the relevant account year ending on December 31, 1959. In that regard the Income-tax Officer issued a notice under Section 22 (2) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the "1922 Act") on June 1, 1960. The same was served on the assessee on June 13, 1960. That notice required the assessee to submit its return on or before July 18, 1960. On July 18, 1960, the assessee moved for extension of time for submitting its return. The Income-tax Officer extended the time by two months and at the same time he informed the assessee that no further time would be allowed. The assessee failed to furnish its return within the extended time. Thereafter a notice under Section 28 (3) of the 1922 Act was served on the assessee on January 16, 1961. On the very next day, viz., January 17, 1961, the assessee filed its return for the assessment year in question. The assessment was completed by the Income-tax Officer only on October 31, 1962. Meanwhile on April 1, 1961 the Income-tax Act, 1961 (to be hereinafter referred to as the "Act") came into force. As under the provisions of Section 297 (2) (g) of the Act, the proceedings for the imposition of the penalty had to be initiated and completed under the Act, a fresh notice under Section 274 (1) of the Act was served on the assesee. The assessee objected to the validity of the notice but that objection was overruled. At present we are not concerned with that objection. We are also not concerned with the other objections taken by the assessee which were negatived by the Tribunal. The Income-tax Officer determined the tax due from the assessee for the assessment year at Rs. 1,25,512/10 P. and on that basis, the penalty payable by the assessee was fixed at Rupees 12,734/10 P. At this stage it may be mentioned that on February 2, 1961, a provisional assessment was made by the Income-tax Officer under Section 23-B of the 1922 Act. Immediately thereafter the assessee deposited Rupees 92,294/55 P. In determining the penalty due from the assessee, the Income-tax Officer took into consideration not the amount demanded under S. 156 of the Act but the amount assessed under S. 143 of the Act. In appeal, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. On a further appeal, the Tribunal came to the conclusion that the penalty under Section 271 (1) (a) (i) is to be levied on the tax assessed minus the amount paid under the provisional assessment order namely Rupees 92,294/55 P. On the basis of that finding, it determined the penalty payable by the assessee at Rupees 2,737/44 P. The conclusion of the Tribunal was accepted as correct by the High Court.

5. Learned Counsel for the Revenue, Mr. Manchanda conte