B. Damodar and Company vs Additional Commissioner of Income Tax, Mysore and Another

Govinda Bhat, C. J.

The petitioner was an assessee to tax under the Income Tax Act, 1961, for the assessment year 1966-67. The assessing authority determined the amount of tax at Rs. 14,850 after adjusting a sum of Rs. 2,000 towards the advance tax paid. The balance tax due is Rs. 12,850 and a demand notice was issued for the said balance amount.

Penalty proceedings were taken u/s 271(1) of the Act and the penalty amount was computed on the total tax assessed but not on the balance tax payable. The revision petition preferred by the assessee to the Commissioner of Income Tax was dismissed.

The only contention by the learned counsel for the petitioner assesses before us was that tax payable is not the same thing as tax assessed as held by the Supreme Court in Commissioner of Income Tax v. Vegetable Products Ltd. According to the said decision, the amount of penalty has to be computed on the balance tax due for which notice of demand is issued after making the order of assessment and not on the tax assessed.

In that view, the order of the Commissioner impugned (exhibit H), in so far as it relates to the assessment year 1966-67, cannot be supported and is liable to be quashed. Accordingly, we allow this writ petition, quash the impugned order of the Commissioner (exhibit H) in respect of the assessment year 1966-67, and further direct the Commissioner to dispose of the petitioner''s revision petition in accordance with law and in the light of the decision of the Supreme Court stated above. It is ordered accordingly. No costs.