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Calculation of penalty for a registered firm treated as unregistered firm under section 271(2) of the Income-tax Act, 1961. Detailed Analysis: The case involved a partnership firm, the assessee, which filed returns after the due date, leading to penalty proceedings under section 271(1)(a) for multiple assessment years. The Appellate Assistant Commissioner directed to limit the penalty amount for a registered firm to twice the tax sought to be evaded. Both the assessee and the Revenue appealed to the Tribunal. The assessee argued that no penalty was applicable as the advance tax paid covered the assessed tax amount. The Tribunal referred to relevant case laws, including the Ganesh Dass case and a decision of the Rajasthan High Court, to conclude that if advance tax paid covers the assessed tax, no penalty under section 271(1)(a) is leviable. The Tribunal set aside the penalty orders and remitted the matter back to the Income-tax Officer for fresh adjudication. The main contention was whether the apex court's decision in the Ganesh Dass case regarding interest under section 139(8) applied to penalty under section 271(1)(a). The court analyzed sections 139(8) and 271(1) to determine the applicability of the Ganesh Dass case. The court emphasized that if the assessed tax is already paid through advance tax or tax deducted at source, no penalty is payable. The court clarified that penalty is calculated based on the assessed tax, which is reduced by amounts deducted at source or paid in advance. Therefore, if no tax remains to be paid after assessment, the penalty amount would be zero. The court highlighted that the penalty provisions under section 271(2) are relevant only when a penalty is imposable under section 271(1). In conclusion, the court answered the reframed question in the negative, favoring the assessee and against the Revenue. The judgment highlighted that when the assessed tax is nil due to advance tax or tax deducted at source covering the entire tax liability, no penalty is leviable. Judge D. M. Patnaik concurred with the judgment.
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