Summarize the following court judgment. Appeal No. 434 of 1960. Appeal by special leave from the judgment and order dated October 4	 1956	 of the Hyderabad High Court in I.T.R. No. 116/5 of 1954 55. K. N. Rajagopal Sastri and D. Gupta	 for the appellant. A	 V. Viswanatha Sastri	 S.N. Andley	 J. B. Dadachanji	 Rameshwar Nath and P. L. Vohra	 for the respondents. February 22. The Judgment of the Court was delivered by SHAH	 J. M/s. Bhikaji Dadabhai & Co. herein. after called the assessees owned an oil mill at Khammamath in the area of the former State of Hyderabad. For the year of assessment Fasli 1357 (October 1	 1946	 to September 30	 1947)	 the assessees returned an income of Rs. 50	384/ . The Income tax Officer found that the books of account maintained by the assessees were unreliable and by his order dated February 10	 1950	 he assessed their total income at Rs. 1	63	131/ . The Income tax Officer had	 before finalising the assessment	 issued on December 22	 1949	 a notice to the assessees under section 40 of the Hyderabad Income tax Act requiring them to show cause why penalty should not be imposed upon them and by order dated October 31	 1951	 directed the assessees to pay by way of penalty Rs. 42	000/ in addition to the tax. This order was confirmed in appeal by the Appellate Assistant Commissioner. In appeal	 the Income tax Appellate Tribunal observed that by virtue of the provisions of section 13 (1) of the Indian Finance Act	 1950	 the Hyderabad Income tax Act had ceased to have effect and as the power to impose penalty under section 40 of the Hyderabad Income tax Act was not saved	 the order imposing penalty was without jurisdiction	 The Tribunal observed; 925 " The Income tax Officer may have been in error in imposing the penalty	 but there was no appeal against the order of the Income tax Officer to the Appellate Assistant Commissioner. Section 42(1) of the Hyderabad Income tax Act gives a right to an assessee to appeal if he objects to an order under section 40 made by an Income tax Officer. Section 40 ceased to have effect. There can therefore be neither an order under section 40 nor an appeal against the order if an order.has been wrongly made. The remedy of the assessee lies elsewhere	 and not by way of an appeal to the Appellate Assistant Commissioner	 and on that view dismissed the appeal. At the instance of the assessees, the following questions were referred by the Tribunal to the High Court of Judicature at Hyderabad 1. Whether on 31 10 1951, the Income tax Officer, Warrangal Circle, had the power to impose a penalty under section 40(1) of the Hyderabad Income tax Act in respect of the assessment for the year 1357 F. ? 2. Whether the assessee had a right to appeal against the order of the Income tax Officer imposing the penalty ? 3. If the Appellate Assistant Commissioner did not have jurisdiction to hear the appeal, whether the order of the Appellate Assistant Commissioner is a nullity and therefore the order of the Income tax Officer erroneous, though it may stand until it is set aside by a competent authority ? The High Court answered the first and the third questions in the negative and the second question in the affirmative. The High Court observed that the Appellate Assistant Commissioner had power to entertain the appeal in which the question of the power of the Income tax Officer to impose a penalty was challenged, and the decision of the Appellate Assistant Commissioner was not without jurisdiction. The High Court also proceeded in a petition separately filed by the assessees to direct the Income tax Appellate Tribunal to set aside the order of the Income tax Officer imposing a penalty as a logical 926 consequence of the view the Tribunal had taken regarding the absence of power in the Income tax Officer to levy a penalty. Against the order passed by the High Court, this appeal with special leave is preferred. We are in agreement with the High Court that the appeal to the Appellate Assistant Commissioner was competent. Even if the Income tax Officer committed an error in passing the order imposing penalty because the conditions necessary for invoking that jurisdiction were absent, an appeal against his order on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner is under the Act constituted an appellate authority against certain orders of the Income tax Officer, and exercise of that jurisdiction is not made conditional upon the competence of the Income tax Officer to pass the orders made appealable. The Appellate Assistant Commissioner had as a court of appeal jurisdiction to determine the soundness of the conclusions of the Income tax Officer both on questions of fact and law and even as to his jurisdiction to pass the order appealed from. We are, however, unable to agree with the High Court that because of the repeal of the Hyderabad Income tax Act by the Finance Act, 1950, the power to impose a penalty in respect of the years preceding the date of repeal was lost. The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income tax Officer. Thereafter the Indian Legislature enacted the Finance Act, 1950, which by sub section (1) of section 13 in so far as it is material provided:  If immediately before the 1st day of April	 1950	 there is in force in any part B State. any law relating to income tax or super tax. that law shall cease to have effect except for the purposes of the levy	 assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act	 1922. " 927 Manifestly	 by section 13	 the Hyderabad Income tax Act ceased to have effect as from April 1	 1950. But the operation of that Act in respect of levy	 assessment and collection of income tax and super tax in respect of periods prior thereto for which liability to Income tax could not be imposed under the Indian Income tax Act	 1922	 was saved. The Judicial Committee of the Privy Council in Commissioner of Income tax	 Bombay Presidency and Aden vs Messrs. Khemchand Ramdas observed: " One of the peculiarities of most Income tax Acts is that the word 'assessment ' is used as meaning sometimes the computation of income	 sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer." The Hyderabad Income tax Act also used the expression" assessment " in different senses. In certain sections	 for instance sections 31 and 39 the expression is used as in the sense of mere computation of income; in other sections it is used in the sense of determination of liability and in certain other sections in the sense of machinery for imposing liability and procedure in that behalf. "By the Finance Act	 1950	 the Hyderabad Income tax Act was expressly kept alive in respect of periods which include the assessment year in question for purposes of levy	 assessment and collection of income tax. The High Court expressed the view that the word "assessment" in section 13 (1) included the whole procedure for imposing liability upon the taxpayer but not to the procedure for imposing a penalty. They thought that the Hyderabad Income tax Act dealt with liability to pay income tax and penalty in distinct provisions	 both relating to imposition and recovery and that if the Legislature had intended to keep alive the Hyderabad Income tax Act for all purposes including the levy of penalty with respect to any particular year or years of assessment	 it could have said so in terms clear and unambiguous instead of limiting the operation only to " levy	 assessment and collection." In the view of the High Court	 imposition of penalty (1) (1938) L.R. 65 I.A. 236; 928 was not a necessary concomitant or incident of the process of assessment	 levy and collection of tax. The High Court proceeded upon the view that by saving the Hyderabad Income tax Act for the purposes. of levy	 assessment and collection of income tax	 the entire procedure for imposing liability to pay tax and. for collection of tax was saved	 but penalty not being tax	 provisions relating to imposition of and collection of penalty did not survive the repeal of the Hyderabad Income tax Act. This Court considered in C. A. Abraham vs The Income tax Officer	 Kottayam(1) the question whether the expression " assessment " as used in section 44 of the Indian Income tax Act included the procedure for imposition of penalty in respect of a dissolved firm and it was observed: "The expression 'assessment ' used in these sections (provisions of Ch. IV of the Indian Income tax Act) is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44	 it is declared that the partners or members of the association shall be jointly and severally liable to assessment	 it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof. By section 28	 the liability to pay additional tax which is designated penalty is imposed in view of the dishonest or contumacious conduct of the assessee." This court regarded penalty as an additional tax imposed upon a person in view of his dishonest or contumacious conduct. It is true that under the Hyderabad Income tax Act	 distinct provisions are made for recovery of tax due and penalty	 but that in our judgment does not alter the true character of penalty imposed under the two Acts. Nor are we able to agree that because in respect of the 	 the Indian Tariff Act	 1934	 the 	 the Central Excise and Salt Act	 1944	 and the Indian Post Offices Act	 1898	 which were extended (1) ; 929 to the whole of India by section 11 of the Finance Act	 1950	 and the provisions corresponding thereto were repealed by the proviso	 and it was expressly provided that the previous operation of the corresponding law or any penalty	 forfeiture or punishment ordered in respect of an offence committed against any such law or any investigation	 legal proceeding or remedy in respect of such penalty	 forfeiture or punishment or any such investigation	 legal proceeding or remedy may be instituted	 continued or enforced and any such penalty	 forfeiture or punishment may be imposed as if the Act had not been passed	 that under sub section (1) of section 13 it was intended to prohibit the authorities otherwise competent in that behalf fro` commencing or continuing the proceeding for levying penalty even if the circumstances justify such a course. The scheme of the statutes specified in section 11 and which are repealed by sub section (2) of section 13 are somewhat different from the scheme of the Indian Income tax Act. Because by sub section (1) of section 13 of the Finance Act	 1950	 the Hyderabad Income tax Act was to cease to operate as on April 1	 1950	 except for the purposes of levy	 assessment and collection of income tax and super tax	 whereas in respect of other Acts specified in section 11 substantially provisions similar to those contained in section 6 of the General Clauses Act were enacted	 an intention that proceedings for penalty may be commenced and continued under the Acts specified in section 11	 whereas no such proceedings may be commenced or continued under the Hyderabad Income tax Act is not indicated. We are of the view that the High Court erred in holding that the proceedings for imposing the penalty could not be continued after the enactment of section 13 (1) of the Finance Act	 1950. The appeal will therefore be allowed and the answer to the first question will be recorded in the affirmative	. On the view taken by us	 it is unnecessary to pass	any orders on the petition under article 226 of the Constitution which was presented to the High Court. The appellant will be entitled to his costs of the appeal in this Court and in the High Court. Appeal allowed.

The Income tax Officer found that the respondents ' books of accounts were unreliable and after assessing income for Fasli year 1357	 corresponding to the year 1946 47	 issued notice to the respondents on December 22	 1949	 under section 40 of the Hyderabad Income tax Act to show cause why penalty should not be levied in addition to the tax and by an order dated October 31	 1951	 directed payment of the said penalty. The State of Hyderabad merged with the Indian Union during the pendency of the proceedings before the Income tax Officer and by section 13 of the Finance Act	 1950	 the Hyderabad Income tax Act ceased to have effect from April 1	 1950	 but the operation of that Act in respect of levy	 assessment and collection of income tax and super tax in respect of periods prior thereto for which liability to income tax could not be imposed under the Indian Income tax Act	 was saved. The question was whether (a) the Income tax Officer had power on October 31	 1951	 to impose a penalty under section 40(1) of the Hyderabad Income tax Act and (b) whether the assessee had a right to appeal against the order of the Income tax Officer imposing penalty and whether the Appellate Assistant Commissioner had jurisdiction to hear appeals or whether his order was a nullity. Held	 that the power of the Income tax Officer to impose a penalty under section 40(1) of the Hyderabad Income tax Act in respect of the year preceding the date of the repeal of the Hyderabad Income tax Act was not lost because by section 13 of the Finance Act	 1950		for the operation by the Hyderabad Income tax Act in respect of levy	 assessment and collection of income tax and super tax in respect of periods prior to April	 1951	 for which liability to income tax could not be imposed under the Indian Income tax Act	 was saved and so the proceedings for imposing the penalty could be continued after the enactment of section 13(1) of the Indian Finance Act	 1950. Held	 that the appeal against the order of the Income tax Officer on the ground that he was not competent to pass the order did lie to the Appellate Assistant Commissioner	 whose jurisdiction was not made conditional upon the competence of the 924 Income tax Officer to pass the. orders made appealable; as a court of appeal he had jurisdiction to determine the soundness of the conclusions of the Income tax Officer both on the question of fact and law and even as to his jurisdiction to pass the order appealed from	 and his order was not a nullity.