1990 (12) TMI 18 - HC - Income Tax

Summary

Issues Involved:
1. Computation of quantum of penalty u/s 273(1)(b) of the Income-tax Act, 1961.
2. Consideration of tax deductible at source u/s 194 and 195 in computing "assessed tax" u/s 215(5).

Summary:

Issue 1: Computation of Quantum of Penalty u/s 273(1)(b)
The primary issue was determining how the quantum of penalty u/s 273(1)(b) should be computed. The Income-tax Officer (ITO) found that the assessee did not file the statement of advance tax nor paid advance tax during the relevant accounting year. Consequently, the ITO initiated penal proceedings u/s 273(2)(c) and imposed a minimum penalty of Rs. 4,439, being 10% of the shortfall of Rs. 44,390. The Commissioner of Income-tax (Appeals) confirmed the penalty but corrected the applicable section to 273(1)(b). The Tribunal directed the ITO to recompute the penalty by considering the tax deductible at source u/s 194 and 195.

Issue 2: Consideration of Tax Deductible at Source u/s 194 and 195 in Computing "Assessed Tax" u/s 215(5)
The Tribunal held that for determining the quantum of penalty u/s 273(1)(b), the tax deductible at source u/s 194 and 195 must be considered in computing the "assessed tax" as defined u/s 215(5). The Revenue contended that only the tax actually deducted at source should be considered, not merely deductible. The court clarified that the term "tax deductible" means tax actually deducted at source. The Tribunal's direction to recompute the penalty was found unnecessary as the ITO had already given credit for the tax deducted at source.

Conclusion:
1. The court held that tax deductible at source and deducted within the financial year u/s 194 and 195 must be considered in computing the "assessed tax" u/s 215(5).
2. The court found that the ITO had correctly computed the penalty after allowing credit for the tax deducted at source, thus answering the second question in the negative.

There was no order as to costs.