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Issues: Determination of penalty under section 271(1)(a)(i) of the Income-tax Act, 1961 with reference to gross tax reduced by self-assessment tax, tax deducted at source, and advance tax.
The judgment by the High Court of Bombay pertained to a reference under section 256(1) of the Income-tax Act, 1961, initiated by the Commissioner. The central issue was the quantification of penalty under section 271(1)(a)(i) of the Act against the assessee, considering the gross tax, self-assessment tax under section 140A, tax deducted at source, and advance tax. The case involved assessment years 1962-63 and 1963-64 where the assessee failed to furnish returns timely, leading to penalty notices being issued. The Tribunal reduced the penalty amount based on the contention that the tax paid on self-assessment should also be considered in calculating the penalty, contrary to the Revenue's stance. The Tribunal directed the Income Tax Officer to recalculate the penalty based on the assessee's contentions. The High Court analyzed the relevant sections of the Act, particularly section 271, which outlines penalties for non-compliance. The court highlighted the retrospective effect of an amendment introducing an Explanation in section 271, clarifying that tax deducted at source and advance tax should be considered in computing the assessed tax, but not the tax paid on self-assessment under section 140A. The court rejected the assessee's argument that the Explanation should not be considered due to its post-Tribunal insertion, citing precedents supporting the retrospective application of such amendments. The court referenced a decision by the Punjab and Haryana High Court to emphasize the retrospective nature of the amendment to section 271, which necessitated considering the Explanation in penalty calculations. The court dismissed the assessee's counsel's argument to disregard the Explanation due to its post-Tribunal insertion, asserting that the Explanation's retrospective effect mandated its application. The court also cited a case from the Allahabad High Court concerning a similar retrospective amendment, highlighting the distinction between statutory amendments and Presidential Orders. The court disagreed with the Allahabad High Court's approach of ignoring retrospective amendments made after a tribunal's decision, affirming the relevance and applicability of the retrospective amendment in the present case. Ultimately, the court answered the referred question in the negative, ruling against the assessee and directing them to bear the costs of the reference.
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