1978 (12) TMI 65 - AT - Income Tax

Summary

Issues:
1. Levy of penalties under section 28(1)(a) of the IT Act, 1922 for late filing of returns.
2. Interpretation of section 297(2)(g) of the IT Act, 1961 regarding the imposition of penalties.
3. Applicability of penalty provisions under the old Act versus the new Act.
4. Determining the crucial date for the imposition of penalties under the IT Act.

Detailed Analysis:
1. The appeals before the Appellate Tribunal ITAT Jabalpur involved the levy of penalties under section 28(1)(a) of the IT Act, 1922 for late filing of returns for the assessment years 1958-59, 1959-60, and 1960-61. The returns were filed after the due dates specified by the Income Tax Officer (ITO), leading to the imposition of penalties.

2. The main controversy revolved around the interpretation of section 297(2)(g) of the IT Act, 1961, which deals with the imposition of penalties. The appellant argued that penalties could only be imposed under the new Act and not under the old Act, as the time limit for penalties under the new Act had expired. The Appellate Assistant Commissioner (AAC) upheld the ITO's decision to levy penalties under the old Act based on section 297(2)(g) and the General Clauses Act.

3. The Tribunal referred to the Supreme Court's decision in Jain Bros. & Ors. vs. Union of India & Ors. (1970) 77 ITR 107, which clarified that penalties must be imposed according to the tax assessed and after the completion of the assessment. The Full Bench of the Punjab & Haryana High Court and the Allahabad High Court also emphasized that penalties for assessments completed after April 1, 1962, must be imposed under the IT Act of 1961.

4. The crucial date for the imposition of penalties was determined to be the date of completion of the assessment, as highlighted by the Supreme Court's ruling. Since the assessments for the relevant years were completed after April 1, 1962, penalties could only be initiated and completed under section 271(1)(a) of the IT Act, 1961. As the time limit for levying penalties had expired for the assessment years in question, the penalties imposed by the ITO were deemed invalid, leading to the cancellation of penalties for all three assessment years.

In conclusion, the Tribunal allowed the appeals, canceling the penalties imposed by the authorities for the late filing of returns for the assessment years in question.