2006 (1) TMI 108 - HC - Income Tax

Interest Tax Act, 1974 - penalty imposed under the Interest-tax Act by the assessing authority has been set aside - we do not find any force in argument of revenue that the tax would be charged on the difference of the chargeable amount as against the amount so disclosed in the return and as determined by the assessing authority - The argument appears to be based on some misconception the view taken by the two appellate authorities that the provisions of section 271(1)(c) of the Income-tax Act or the Explanation attached to section 148 of the Income-tax Act which is a separate and independent Act could not have been invoked for the purpose of levying penalty under the Interest tax Act, does not suffer from any illegality revenue s appeal is dismissed

Summary

Issues:
1. Challenge to penalty imposed under the Interest-tax Act.
2. Interpretation of provisions under the Income-tax Act and Interest-tax Act.
3. Application of penalty clauses.
4. Assessment of chargeable interest and imposition of penalty.

Detailed Analysis:
1. The appeal was filed by the Revenue challenging the penalty imposed under the Interest-tax Act by the assessing authority. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal set aside the penalty. The assessing authority imposed the penalty for non-filing of the return by the due date, similar to the provision under the Income-tax Act for non-filing of income tax returns. However, the appellate authorities found that penalty under the Interest-tax Act could not be imposed based on the provisions of section 13 of the Act and section 271(1)(c) of the Income-tax Act. They also noted that the chargeable interest amount shown in the return was in line with the assessment order, and the Explanation under the Income-tax Act did not apply to the Interest-tax Act.

2. The Commissioner of Income-tax recorded that the non-filing of the return voluntarily and filing it only after a notice was issued did not amount to concealment of chargeable interest, thus no basis existed for imposing the penalty. The Income-tax Appellate Tribunal upheld this finding and dismissed the appeal. The High Court concurred with the decisions of the appellate authorities, stating that no substantial question of law was involved. The argument that non-filing of the return voluntarily would attract penalty under the Interest-tax Act was rejected, as it did not align with the provisions of the Act.

3. The court also addressed the argument that tax should be charged on the difference between the chargeable amount disclosed in the return and the amount determined by the assessing authority. It was clarified that the assessment was eventually made on the same amount disclosed by the assessee after the order passed in appeal. Therefore, the argument based on a misconception was deemed invalid, and it was concluded that there was no ground for entertaining the appeal. The court dismissed the appeal, stating it had no force based on the findings and interpretations of the appellate authorities.