In a case before the Allahabad High Court the petitioner, who stood surety to pay income tax, wealth tax and gift tax liability of a firm in the case of default, deposited title deeds of his immovable property to the Commisioner.There was no outstanding demand of Income-tax, Wealth-tax and Gift-tax against the firm but a penalty u/s 271(1) (c) was imposed and petitioner was asked to pay outstanding amount of penalty. The High Court in the case of Jogender Singh v. ITO (107TAX394) held that tax and penalty are treated differently under the Act. The petitioner could be made liable for payment of outstanding amount of penalty assessed against the firm only if it was established that the terms of the surety bond made him liable in respect of the said amount of penalty. Further the demand of the amount of penalty outstanding against the firm was being made from the petitioner not by virtue of any provision of the Act, but by virtue of the surety bond, executed by the petitioner. Since under the terms of the surety bond the petitioner had not undertaken the liability for payment of penalty imposed upon the firm and its partners, the revenue could not realise the said amount from the petitioner. Further the Court held the penalty amount couldn’t be realised from the surety by invoking either section 221 or 161(1) of the Act.