1973 (12) TMI 16 - HC - Income Tax

Waiver of penalty under sections 271(1)(a) and 271(1)(c) - if the commissioner passes an order levying minimum penalty under s. 271(1)(c) and did not say anything about penalty under s. 271(1)(a) whether it can be deemed that the penalty has been waived - Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in deleting the penalties of Rs. 24,671 and Rs. 24,388 levied under section 271(1)(a) for the assessment years 1958-59 and 1959-60

Summary

Issues:
- Whether the Appellate Tribunal was right in law in deleting the penalties under section 271(1)(a) for the assessment years 1958-59 and 1959-60?

Analysis:
The case involved a question referred to the High Court under section 256(1) of the Income-tax Act, 1961, regarding the deletion of penalties under section 271(1)(a) for the assessment years 1958-59 and 1959-60. The assessee had committed defaults under the Act, and penalty proceedings were initiated by the Income-tax Officer. The Commissioner of Income-tax, after considering the case, conveyed a decision to waive the penalties under section 271(1)(c) but did not address the penalties under section 271(1)(a). The assessee accepted this decision, leading to the initiation of penalty proceedings by the Income-tax Officer. The Appellate Tribunal later allowed the appeal, stating that no penalty should be levied post the settlement, and the silence of the Commissioner should be considered in favor of the assessee. The Tribunal's decision was based on the interpretation of section 271 of the Act, which allows the Commissioner to waive or reduce penalties. Since the Commissioner did not address the penalty under section 271(1)(a), it was assumed that the penalty was waived. The High Court upheld the Tribunal's decision, stating that there was no error in the view taken.

Therefore, the High Court answered the question in the affirmative, in favor of the assessee, concluding that the penalty under section 271(1)(a) was waived by the Commissioner's silence. The Court highlighted the power of the Commissioner under section 271(4A) to waive or reduce penalties and emphasized that in this case, the Commissioner's silence indicated a waiver of the penalty under section 271(1)(a). The judgment reaffirmed the Tribunal's decision, stating that the penalty should be deleted based on the circumstances and the interpretation of the relevant provisions of the Income-tax Act, 1961.