1990 (1) TMI 112 - AT - Income Tax

Summary

Issues:
- Non-furnishing of contract particulars in prescribed Form No. 52 within the stipulated time frame.
- Imposition of fine under section 285A(2) by the Commissioner of Income-tax.
- Assessee's contention of substantial compliance and reliance on legal precedents.
- Comparison of requirements under section 285A and section 194C.
- Judicial discretion in imposing penalties for statutory violations.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi dealt with a case where the Commissioner of Income-tax issued a notice to an assessee for not furnishing contract particulars in Form No. 52 within the specified time frame for four contracts with Maruti Udyog Ltd. exceeding Rs. 50,000 each. The Commissioner imposed a fine of Rs. 5,000 under section 285A(2) after considering the assessee's reply. The assessee contended that substantial compliance was made, and cited legal precedents to support its argument. The Departmental Representative argued that the default was inexcusable as the assessee was not a new contractor, and section 194C did not negate the need for compliance with section 285A while it was in force.

The Tribunal considered the submissions and legal precedents cited. It noted that one of the contracts did not exceed Rs. 50,000 and could not be considered for penalty under section 285A. The Tribunal referred to the Finance Act, 1988, which deleted section 285A effective from April 1, 1988, as section 194C already addressed tax deduction at source for contractors. The Tribunal highlighted that the purpose of obtaining information under section 285A was to prevent tax evasion, a requirement no longer deemed necessary post the amendment. The Tribunal compared Form No. 52 with Form No. 26C under section 194C, noting the similarity in required information.

The Tribunal emphasized the principle of judicial discretion in imposing penalties for statutory violations. Citing legal precedents, including the Supreme Court's stance on penalties for statutory breaches, the Tribunal concluded that the fine imposed by the Commissioner could not be upheld in this case. It noted that the power to levy fines under section 285A should be exercised judiciously and fairly, considering all relevant circumstances. The Tribunal allowed the appeal, overturning the fine imposed on the assessee, given the technical nature of the default and the subsequent deletion of section 285A.