761/CBDT. - Income Tax - 761/CBDT

Instruction No: 761/CBDT Date of Issue: 21/9/1974 Section(s) Referred: 271(1)(a) Statute: Income - Tax Act, 1961 In Commissioner of Income-tax Versus vegetable products Ltd. (88 I.T.R.192), the Supreme Court has held that the expression "the amount of tax, if any, payable by him" referred to in the first part of section 271(1)(i) means that tax payable under demand notice. In a Board's letter No. 284/4/73-IT(Inv) dated the 3rd February, 1973 you were informed that legislative action was contemplated. The Direct Taxes (Amendment) Act, 1974 has since been passed by both houses of parliament and has received the assent of the president on 18th August, 1974. Section 13 of this Act reads as under:- "In section 271 of the Income-tax Act, for clause(i) of sub-section (1), the following clause shall be substituted and shall be deemed always to have been substituted, namely:- (1) in the cases referred to in clause (a), in addition to the amount of the tax, if any, payable by him, such equal to two percent of the assessed tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent of the assessed tax. Explanation:- In this clause, "assessed tax" means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C". 2. In view of this provision which has retrospective effect, the decision of the Supreme Court in Vegetable Products Ltd. is no longer applicable. All orders u/s 271(1)(a) passed in the light of the Supreme Court decision may be reviewed and suitable action taken for rectifying them. In these cases where the Appellate Assistant Commissioner or the Tribunal have followed the Supreme Court decision, the retrospective amendment of the law may be brought to their notice with the request for reviewing their orders.