1975 (9) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Deduction of self-assessment tax under section 140A for determining penalty under section 271(1)(a) of the Income-tax Act, 1961.
2. Justification of the Appellate Tribunal's decision regarding the grant of time for filing the return.
3. Applicability of penalty under section 271(1)(a) if the return is filed under section 139(4).
4. Determination of penalty with reference to net tax after deduction of self-assessment tax.

Detailed Analysis:

1. Deduction of Self-Assessment Tax:
The primary issue was whether the amount of tax paid on self-assessment under section 140A could be deducted from the tax amount for determining the penalty under section 271(1)(a). The Appellate Assistant Commissioner directed the Income-tax Officer to recalculate the penalty after deducting the section 140A tax amount. The Income-tax Appellate Tribunal upheld this view, dismissing the department's appeal.

2. Justification of the Appellate Tribunal's Decision:
The Tribunal held that by levying interest under section 139, the Income-tax Officer must be deemed to have granted time up to the date of filing the return. The department's contention that the Tribunal's decision was incorrect was rejected, as the Tribunal's decision was based on the law as it stood before the amendment to section 271(1)(a)(i) on August 18, 1974, which had retrospective effect from 1961.

3. Applicability of Penalty for Returns Filed Under Section 139(4):
The Tribunal also held that even if the return was treated as filed under section 139(4), penalty was not leviable. The department's argument that the penalty should be imposed regardless was not accepted, as the Tribunal's decision was based on the law in force at the time of its decision.

4. Determination of Penalty with Reference to Net Tax:
The Tribunal decided that the penalty leviable under section 271(1)(a) should be with reference to the net tax remaining due after deduction of the tax paid under section 140A/141. The department argued that the amendment to section 271(1)(a)(i) should apply, which stated that the self-assessment tax is not deductible from the penalty amount. However, the court held that the law at the time of the Tribunal's decision should apply, not the amended law with retrospective effect.

Conclusion:
The court dismissed the income-tax case, stating that the Tribunal's decision was correct under the law as it existed at the time of its decision. The court emphasized that the High Court's jurisdiction under section 256(2) is to decide whether the Tribunal's decision is correct based on the law in force when the decision was made, not on subsequent amendments. The court also clarified that it could not require the Tribunal to refer questions based on laws not in force at the time of the Tribunal's decision. The income-tax case was dismissed without costs.