1970 (8) TMI 20 - HC - Income Tax

Notices for filing returns were issued under Old IT Act 1922 - but return were filed belatedely in December 1962 - Notice under section 274 r.w.s. 271(1)(a) was issued to the assessee directing him to show cause why penalty be not imposed for the late filing thereof - whether penalty is imposable under IT Act 1961

Summary

Issues:
Late filing of tax returns, imposition of penalty under section 271(1)(a) of the Income-tax Act, 1922, reduction of penalties by the Appellate Assistant Commissioner, reference to High Court regarding penalty determination under the Act of 1922, reasonableness of reduced penalties compared to the minimum prescribed by section 271(1)(i).

Analysis:
The judgment by the High Court of Punjab and Haryana dealt with the late filing of tax returns by an assessee-firm for the assessment years 1960-61 and 1961-62. The Income Tax Officer imposed penalties for the delays in filing the returns, considering them deliberate and wilful. The Appellate Assistant Commissioner partially accepted the appeal and reduced the penalties on the grounds of constitutional violation, specifically articles 14 and 20(1) of the Constitution of India. However, the Income-tax Appellate Tribunal disagreed with the Appellate Assistant Commissioner's reasoning but held that penalties should be determined under the provisions of the Act of 1922, not the Act of 1961. The Tribunal found the reduced penalties reasonable and did not interfere with them. The revenue moved applications for reference to the High Court, raising questions regarding the penalty determination and the reasonableness of the reduced penalties.

The High Court considered the arguments presented by the revenue, citing the decision in Jain Brothers v. Union of India and a Division Bench judgment of the court in Commissioner of Income-tax v. Kirpa Ram Radha Kishan. The court noted that both assessments were completed after the first day of April 1962, even though they were for years ending before that date. Referring to the observations in Jain Brothers case, the court concluded that penalties should be imposed in accordance with the provisions of section 271 of the Act of 1961 for assessments completed after April 1, 1962. The court also found that the Division Bench judgment supported the revenue's position on the matter.

Therefore, the High Court answered both questions referred for decision in the negative, indicating that penalties should be determined under the Act of 1961 and that the reduced penalties were reasonable. The judgment was delivered by SANDHAWALIA J., with agreement from PREM CHAND PANDIT J.