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Issues:
1. Imposition of penalty under section 271(1)(a) of the Income-tax Act, 1961. 2. Validity of the Tribunal's order in not considering various circumstances and facts. 3. Liability of penalty under section 271(1)(a) for a registered firm with no assessed tax. 4. Imposition of penalty on a registered firm despite nil assessed tax. 5. Setting aside the order of the Deputy Commissioner of Income-tax (Appeals) by the Tribunal. Analysis: Issue 1: Imposition of Penalty The assessee, a registered firm, filed late returns despite paying advance tax more than due, leading to a penalty under section 271(1)(a) of the Income-tax Act, 1961. The Deputy Commissioner of Income-tax (Appeals) allowed the appeal, but the Tribunal reversed the decision citing a previous court case. The Tribunal held that penalty can be levied even if advance tax is paid, as the intention of the legislature is clear that late filing of returns attracts a penalty, especially for registered firms. Issue 2: Tribunal's Order Validity The Tribunal's decision was based on the premise that penalty can be imposed regardless of advance tax payment, in line with the legislative intent. The Tribunal rejected the application to refer the matter to the High Court, emphasizing the importance of imposing penalties to deter non-compliance. The High Court reviewed various decisions and upheld the Tribunal's ruling, stating that penalties cannot be nullified by advance tax payment to prevent violations of tax laws. Issue 3: Liability for Penalty without Assessed Tax The Tribunal held that the assessee, a registered firm, was liable for penalty under section 271(1)(a) despite having no 'assessed tax,' as clarified under the Explanation to the Income-tax Act. The Tribunal's decision was based on the stringent view towards registered firms to ensure compliance with tax obligations, irrespective of the actual tax liability. Issue 4: Penalty Imposition on Nil Assessed Tax The Tribunal upheld the penalty imposed on the registered firm, even though the tax assessed was nil. The court emphasized that penalty imposition should not be contingent on the actual tax payable, as it could encourage non-compliance if penalties could be avoided by paying advance tax. Issue 5: Setting Aside Deputy Commissioner's Order The Tribunal set aside the Deputy Commissioner of Income-tax (Appeals) order, considering it perverse, illegal, and void. The High Court, after reviewing relevant precedents, concluded that the earlier decision in a specific case laid down the law more comprehensively and continued to hold precedence. Therefore, the application under section 256(2) of the Income-tax Act was rejected, as no legal question arose in the case.
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