9911796707
TMI Blog1985 (6) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... tension application was filed, being under the bona fide belief that the tax deducted at source was much more than the tax due. The ITO, however, brushed aside the assessee's pleadings and objections and levied a penalty of Rs. 2,550 by treating the firm as unregistered and after adjusting the entire tax deducted at source by referring to the provision of section 271(2). 3. The first appellate authority cancelled the penalty by accepting the plea that the tax required to be paid by the assessee in the ordinary course being tax paid on the registered firm and actually refund having been given after adjusting the tax levied from the tax deducted at source, there could be no question of even computing any penalty. 4. Before us for the revenue, Shri P.K. Sridharan very strongly contended that the AAC wrongly cancelled the penalty. He argued that for the purpose of computing penalty for late filing, the firm had to be treated as unregistered and since on that basis tax worked out was admittedly more than the tax deducted at source, there was a positive liability to which the penalty could be related and worked out. Shri Sridharan next argued that the concept of a registered firm mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be allowed to take advantage but when question of levy of penalty can be said to be fairly debatable, advantage of a favourable view, even taken by a minority of the High Courts, must be given to the subject. On such view of the matter, we are inclined to follow the view taken by the Hon'ble Gauhati High Court, as also the Hon'ble Andhra Pradesh High Court. Since tax deducted at source in the present case far exceeded the tax worked out on the assessed income, there was no question of computing any penalty, which could be in relation to tax levied. Therefore, we see no merit in this revenue appeal. It is dismissed. Per Shri K.C. Srivastava, Accountant Member -- I have perused the order of the learned Judicial Member, but I regret that I cannot concur with his views expressed. 2. Penalty under section 271(1)(a) has to be imposed if there is no reasonable cause for the delay in the filing of the return by the assessee. In the present case, the AAC has not held that there was a reasonable cause and the penalty has been cancelled only on the ground that the advance tax by the registered firm was more than the tax found payable on the completion of the assessment. 3. As no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no reasonable cause for the delay in the filing of the return. On the other hand, where the tax payable is found to be more than the tax paid in advance, the penalty under section 271(1)(a) would become leviable on the basis of that the firm was an unregistered firm. There does not appear to be any warrant for this type of anomaly under the law and the language of the law is clear. I would, therefore, hold that the view expressed by the various High Courts as enumerated in paragraph No. 4 of the order of the learned Judicial Member is more reasonable and it should be followed. In view of this, I set aside the order of the AAC and hold that penalty under section 271(1)(a) should be imposed but the penalty on the basis of its being unregistered firm. The appeal is allowed. REFERENCE TO A THIRD MEMBER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per Shri K.C. Srivastava, Accountant Member -- We have differed in the above case. We proceed to state the point on which we have differed and refer the matter to the President, the Tribunal for getting the matter heard by one or more of the other members of the Tribunal. The point of difference is as follows : 'Whether o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty is a registered firm. For the purpose of deciding whether that condition is satisfied or not, recourse cannot be taken to the provisions of sub-section (2). 3. In order to appreciate the rival contentions, it is desirable to refer to the provisions of section 271(2), which read as under : "When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, then, notwithstanding anything contained in the other provisions of this Act, the penalty imposable under sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm." It is evident that section 271(2) is not applicable to all the assessees. It is applicable to only those assessees who are liable to penalty and are assessed as registered firm. The first question that requires consideration, therefore, is whether the assessee, who has admittedly been assessed as a registered firm is liable to penalty. On the face of it, I am in agreement with the counsel for the assessee that for the purpose of deciding whether this condition is satisfied or not, it may not be proper to apply the provisions of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
