M.M. Dutt, J.
1. This rule is at the instance of the revenue and it is directed against the order of the Additional District Magistrate, 24-Parganas, cancelling the certificate issued by the Income-tax Officer, to the Tax Recovery Officer, 24-Parganas, for the recovery of the amount of penalty imposed on the opposite party, Raj Kumari Narendra Kumari, for her failure to pay advance tax for the quarter ended December 31, 1962, for the financial year 1962-63. The rule has been referred to the Division Bench by C.N. Laik J. for, in the opinion of the learned judge, it involves certain intricate questions of law.
2. The principal point that is involved in this rule is whether for the penalty levied on the assessee by the Income-tax Officer under Section 221 of the Income-tax Act, 1961, hereinafter referred to as the Act, a certificate can be issued under Section 222 of the Act for the recovery of the amount of penalty. The learned Additional District Magistrate is of the view that no penalty can be imposed under Section 221 for the failure of the assessee to pay advance tax and, as such, the question of its recovery under Section 222 of the Act does not arise. In that view of the matter, the learned Additional District Magistrate has, by the impugned order, cancelled the certificate and set aside the proceeding initiated by the Tax Recovery Officer. Hence, this rule.
3. The provisions for collection and recovery of tax are contained in Chapter XVII of the Act. That Chapter is divided into five parts, namely, parts A, B, C, D and K. Part C consists of Sections 207 to 219 and relates to advance payment of tax. Part D of the Chapter contains Section 220 to Section 236A and deals with collection and recovery. Under Section 218(1) of the Act, if an assessee does not pay on the specified date any instalment of advance tax that he is required to pay under Section 210 and does not, before the date on which any such instalment as is not paid becomes due, send under Sub-section (1) or Sub-section (2) of Section 212 an estimate or a revised estimate of the advance tax payable by him, he shall be deemed to be an assessee in default in respect of such instalment or instalments. Section 220, inter alia, provides as to when tax, otherwise than by way of advance tax, is payable, Then comes Section 221, which is as follows:
'221. (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under Sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the Income-tax Officer may direct, and in the case of a continuing default, such further amount or amounts as the Income-tax Officer may, from time to time direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears:
Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard :
Provided further that where the Income-tax Officer is satisfied that the default was for good and sufficient reasons, no penalty shall be levied under this section.
(2) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded.'
4. Section 222, inter alia, provides for the issue of a certificate by the Income-tax Officer to the Tax Recovery Officer for the recovery of arrears due when the assessee is in default or deemed to be in default.
5. The learned Additional District Magistrate seems to think that advance tax is not tax within the meaning of Section 221. Further, he is of the view that as Section 220 with which Part D of Chapter XVII relating to collection and recovery commences does not provide for payment of advance tax, Section 221 is also not applicable for the levy of penalty for non-payment of advance tax. In Union of India v. Sikri & Sons [C.R. No. 4023 of 1969 disposed of on 16-1-1978 Since reported in : [1978]112ITR529(Cal) ], it has been held by us that advance tax is tax. In that case, we have placed reliance on a decision of the Gujarat High Court in Swastik Engineering Works v. Commissioner of Income-tax [1973] 87 ITR 116, where Bhagwati C.J. has expressed the view that advance tax is tax for the purpose of applying the provisions of Section 221 of the Act. We do not, therefore, agree with the view of the learned Additional District Magistrate that no penalty can be levied under Section 221 for the default of the assessee to pay advance tax. But in spite of the view expressed by us in the above case, we agree with the conclusion arrived at by the learned Additional District Magistrate,though on different grounds, which will be stated presently.
6. Sub-section (1) of Section 221 provides for the levy of penalty when an assessee is in default or is deemed to be in default in making a payment of tax which, in view of our above decision in Sikri and Sons : [1978]112ITR529(Cal) , includes advance tax. Sub-section (2) directs cancellation of the penalty levied and the refund of the penalty paid by the assessee if, as a result of any final order, the amount of tax in respect of which the default has been committed, is wholly reduced. If, therefore, at the general assessment, the amount of advance tax is wholly reduced, ' the amount of penalty paid shall be refunded'. Sub-section (2) indicates levy of penalty and payment of the same by the assessee before the final assessment of tax. It does not, however, contemplate that penalty can he recovered before the final assessment of tax by the Income-tax Officer, for it does not provide that the amount of penalty paid or recovered shall be refunded. If Section 221 had contemplated recovery of the penalty levied under Sub-section (1), then Sub-section (2) would have provided for the refund of the penalty so recovered in the event of the tax being wholly reduced at the general assessment. After the levy of penalty under Sub-section (1), an assessee may pay the amount of penalty and in view of Sub-section (2) if the tax is wholly reduced, the amount of penalty paid by the assessee shall be refunded. Thus, it appears that, after a final order is passed, the other levying penalty may be cancelled.
7. A certificate proceeding is analogous to a proceeding for execution of a decree. A decree passed by a civil court conclusively determines the rights of the parties and it is undoubtedly executable. So long as the final determination is not made, any order passed before such determination is not executable. In our view, it is only after the final order under Sub-section (2) of Section 221, of the Act is passed and the order levying penalty is not cancelled, that the order under Sub-section (1) of Section 221 can be executed by the issue of a certificate under Section 222 of the Act. Such final orders are passed after the completion of the general assessments. It is unreasonable to think that the intention of the legislature is that even an order of penalty, which is not final, is executable by the issue of a certificate. Much reliance has been placed by the appellant on Section 229 of the Act which provides that any sum imposed by way of interest, fine, penalty, or any other sum payable under the provisions of the Act, shall be recoverable in the manner provided in Chapter XVII for the recovery of arrears of tax. Section 229 only permits recovery of auy interest, fine or penalty under the provisions of that Chapter, but it docs not authorise such recovery on the basis of an order which has not attained a finality. Section 229, therefore, does not at all support the contention of the petitioner that the penalty imposed on an assessee for his default to pay advance tax is recoverable by the issue of a certificate under Section 222 of the Act before the completion of assessment. The impugned certificate has been issued in terms of an order under Sub-section (1) of Section 221 of the Act, before a final order under Sub-section (2) of Section 221 has been passed and, as such, it cannot be sustained.
8. In these circumstances, we affirm me order of the learned AdditionalDistrict Magistrate setting aside the impugned certificate, though fordifferent reasons. The rule is, accordingly discharged, but there will be noorder for costs.
D.C. Chakravorti, J.
9. I agree.