1984 (3) TMI 179 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty under section 271(1)(a) of the Income-tax Act, 1961 for default in filing the return within the specified time.
2. Interpretation of section 271 regarding penalty imposition when no tax is payable by the assessee.
3. Conflict of judgments between Gauhati High Court and Gujarat/Calcutta High Courts on the liability of penalty for registered firms.

Analysis:
Issue 1:
The judgment deals with an appeal by an assessee against the penalty imposed for a delay in filing the income tax return for the assessment year 1978-79. The Income Tax Officer (ITO) levied a penalty of Rs. 1,300 for the delay in submission of the return. The Appellate Assistant Commissioner (AAC) reduced the penalty, considering the delay to be only of two months. The assessee contested that no penalty should be imposed as no tax was due. However, the ITO's finding that the return was not filed within the specified time without reasonable cause was not challenged.

Issue 2:
The crux of the issue lies in the interpretation of section 271 regarding the imposition of a penalty when no tax is payable by the assessee. The assessee argued that no penalty should be levied as no tax was due, citing judgments from the Gauhati High Court. The Gauhati High Court held that a person who has paid the assessed tax in advance and has no arrears of taxes is exempted from paying any penalty. However, the Gujarat and Calcutta High Courts took a contrary view, stating that penalty is leviable on a registered firm even if no tax is due, as per section 271(2).

Issue 3:
The judgment addresses the conflict of judgments between the Gauhati High Court and the Gujarat/Calcutta High Courts regarding the liability of penalty for registered firms. The Gauhati High Court's interpretation favored the assessee, exempting them from penalty if no tax was payable. In contrast, the Gujarat and Calcutta High Courts held that penalty could be imposed on a registered firm even if no tax was due, based on the provisions of section 271(2) and past Supreme Court rulings.

In conclusion, the Appellate Tribunal upheld the penalty imposed on the assessee, following the interpretations of the Gujarat and Calcutta High Courts. The Tribunal emphasized that liability to pay a penalty can arise even if no tax is payable by a person, as indicated in the relevant provisions of section 271. The judgment dismissed the assessee's appeal, highlighting the preference for the views of the Gujarat and Calcutta High Courts over the Gauhati High Court's interpretation.