1981 (9) TMI 86 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 9 of the C. (P.) S. T. Act, 1964 for penalty imposition.
2. Interpretation of the term "required" in Section 9 of the Act.
3. Relevance of the decision in Calcutta Chromotype Pvt. Ltd. v. ITO [1971] 80 ITR 627 (Cal).

Summary:

1. Applicability of Section 9 of the C. (P.) S. T. Act, 1964 for penalty imposition:
The main issue was whether Section 9 of the C. (P.) S. T. Act, 1964 envisages a levy of penalty for failure in the filing of the return u/s 5 of the Act only or also for the delay in the filing of the return u/s 5(1) or (2). The court observed that Section 9 provides for penalties on failure to furnish the return required u/s 5, failure to produce accounts/documents u/s 6(1), or concealment of particulars of chargeable profits. The court concluded that Section 9 envisages a levy of penalty only for the failure to furnish a return required u/s 5 and not for the default in the filing of the return during the time allowed u/s 5(1) or by notice u/s 5(2).

2. Interpretation of the term "required" in Section 9 of the Act:
The court examined the term "required" in Section 9 and determined that it does not necessarily mean an imperative or authoritative demand to file the return. The court stated that the word "required" can be equated with "authorized" as well. Therefore, if a company liable to tax under this Act has not furnished a return during the time allowed u/s 5(1) or u/s 5(2), it may furnish a return at any time before the assessment is made u/s 5(3). The court rejected the revenue's argument that the word "required" refers only to the filing of a return u/s 5(1) or (2).

3. Relevance of the decision in Calcutta Chromotype Pvt. Ltd. v. ITO [1971] 80 ITR 627 (Cal):
The court referred to the decision in Calcutta Chromotype Pvt. Ltd. v. ITO, where it was held that no penalty could be imposed for failure to file a return within the period prescribed by Section 6 of the S.P.T. Act, 1963, when the return was filed before the assessment was made. The court agreed with this view and held that the ITO is not entitled to impose a penalty on the ground of the failure to file a return within the time prescribed u/s 5(1) or (2) when the return is filed before the assessment is made and the ITO completes the assessment on the basis of such a return.

Conclusion:
The court answered the question in the affirmative, in favor of the assessee and against the department, holding that the Appellate Tribunal was right in confirming the cancellation of penalty ordered by the Appellate Assistant Commissioner. The assessee was entitled to costs assessed at Rs. 200.