1975 (9) TMI 192 - HC - Income Tax

Summary

Issues:
1. Imposition of penalty under Section 271(1)(i) for non-filing of income tax return.
2. Interpretation of the term "net tax payable" under Section 271(1)(i).
3. Effect of retrospective amendment on penalty computation for registered firms.

Analysis:
1. The judgment pertains to the assessment year 1964-65 where a civil engineering contractor firm failed to file its income tax return on time. The Income-tax Officer imposed a penalty of Rs. 8,080 under Section 271(1)(i) for the delay in filing the return. The Appellate Assistant Commissioner and the Tribunal held that since the firm had already paid provisional tax, no penalty was justified based on the net tax payable. The Tribunal relied on a Supreme Court decision regarding the interpretation of "net tax payable" under Section 271(1)(i) to support its decision.

2. The main issue revolved around the interpretation of the term "net tax payable." The Tribunal concluded that as the net tax payable by the firm was nil after considering the tax paid under Section 140A, no penalty should be levied under Section 271(1)(i). This interpretation was based on the Supreme Court's decision in Commissioner of Income-tax v. Vegetable Products Limited, which clarified that the net tax payable should consider deductions for tax paid under relevant sections.

3. The judgment highlighted a retrospective amendment to Section 271(1)(i) by the Direct Taxes (Amendment) Act, 1974, which altered the computation of penalty for registered firms. The amended provision linked the penalty to the assessed tax, disregarding deductions for tax paid under Section 140A. Consequently, the liability for penalty was to be calculated based on the assessed tax without considering the tax already paid provisionally. The Tribunal was directed to reassess the penalty liability in light of the amended provision and determine if there was a reasonable cause for the delay in filing the return.

In conclusion, the judgment emphasized the impact of legislative amendments on penalty computations for registered firms and underscored the need to consider the assessed tax amount without deductions for tax paid in advance while determining penalty liabilities.