1971 (10) TMI 16 - HC - Income Tax

Petition to the Commissioner to reduce penalty - an application for waiver of penalty can be made even after the penalty has been levied - when the return is filed within the outermost limit for filing the returns, whether penalty can be levied - mere fact that an outer limit is fixed for filing a return, does not affect the power of the Income-tax Officer to act u/s 271

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer to impose a penalty under section 271 for delayed returns filed under section 139(4).
2. Obligation of the Commissioner of Income-tax to consider relief under section 271(4A) in a revision petition under section 264.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income-tax Officer to impose a penalty under section 271 for delayed returns filed under section 139(4):

The petitioner, engaged in the business of purchase and sale of tanned skins and magnesite, filed income returns for the assessment years 1963-64 and 1964-65 on March 31, 1965, beyond the prescribed dates of September 30, 1963, and September 30, 1964, respectively. The Income-tax Officer, invoking section 274 of the Income-tax Act, 1961, issued a notice for late submission of returns without sufficient cause and subsequently levied a penalty under section 271(1)(a).

The petitioner contended that the returns were filed in compliance with section 139(4), which allows for filing returns before the assessment is made, and thus the Income-tax Officer had no jurisdiction to impose a penalty. The court examined section 139(1), which mandates the timely filing of returns, and section 139(4), which provides a concession for filing returns before the assessment if not done under section 139(1). The court clarified that section 271, appearing in Chapter 21 dealing with penalties, empowers the Income-tax Officer to impose penalties for failure to file returns under section 139(1) without reasonable cause. The court held that the statutory concession under section 139(4) does not nullify the Income-tax Officer's power to impose penalties under section 271 for delayed returns, as the propriety of such delays must be adjudicated independently.

2. Obligation of the Commissioner of Income-tax to consider relief under section 271(4A) in a revision petition under section 264:

The petitioner filed a revision petition under section 264, seeking relief from the penalty, arguing that the Commissioner of Income-tax must exercise discretion under section 271(4A) to reduce or waive the penalty. The Commissioner rejected the petition, stating that section 271(4A) does not apply once a penalty is levied.

The court disagreed, explaining that section 264, which provides for revisions, is broad in scope and obligates the Commissioner to make necessary inquiries and pass orders in accordance with the Act's provisions, including section 271(4A). The court emphasized that the Commissioner must consider whether the petitioner voluntarily and in good faith disclosed accurate income particulars, cooperated in the assessment inquiry, and made satisfactory tax payment arrangements. The court concluded that the Commissioner erred in refusing to exercise discretion under section 271(4A) solely because the penalty had already been imposed.

Conclusion:

The court found an apparent error in the Commissioner's order and remitted the case back to the Commissioner of Income-tax to reconsider the revision petition in accordance with the law and the observations made in the judgment. The rule nisi was made absolute, and no order as to costs was issued.