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TMI Blog1990 (9) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of Sections 11 and 12 of the Income-tax Act, 1961, the income of the assessee was assessed at nil for both the asst. years. There being a default in not filing the return of income in time, assessing officer initiated penalty proceedings u/s 271(1)(a) and imposed a penalty of Rs. 1,080 for asst. year 1983-84 and Rs. 2,036 for asst. year 1984-85. The penalty has been calculated @ 1% of total receipts for each year of default for both the asst. years. 2. In appeal, the default of late filing of the return was admitted. However, it was claimed that by virtue of Section 271(3)(d) of the Income-tax Act, 1961, no penalty u/s 271(1)(a) is imposable in this case. The AAC cancelled the penalty in view of the decision of the ITAT in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome is to be determined with reference to Section 139(4A) of the Income-tax Act, 1961. In this case, it has never been the contention of the assessee that if effect to Sections 11 and 12 is not given, the income of the trust would not exceed the maximum amount which is not chargeable to income-tax. Moreover, AAC in his decision has observed that the default has been admitted for both the asst. years. We accordingly proceed on the basis that the income of the trust without giving effect to Sections 11 and 12 of the Income-tax Act, 1961 exceeds the maximum amount which is not chargeable to income-tax for both the assessment years i.e., 1983-84 and 1984-85. 5. In the event of default for late filing of the return or failure to file the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each year or part thereof during which the default continuted. " Thus it is evident that even where in the case of a trust income assessed is nil, penalty u/s 271(1)(a) can still be imposed as the quantification is with reference to the income without giving effect to provisions of Sections 11 and 12 of the Act. The appeal of the assessee has been allowed on the ground that by virtue of Section 271(3)(d) of the Income-tax Act, 1961, no penalty is imposable in this case. In our view, it will be useful to quote section 271(3) for ready reference : " 271(3) Notwithstanding anything contained in this section---- (a) no penalty for failure to furnish the return of his total income under sub-section (1) of section 139 shall be imposed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (a) of section 271(3) there is a bar on imposition of penalty, in such cases where total income does not exceed the maximum amount not chargeable to tax by a sum of Rs. 1,500. However proviso to sub-section (3) makes it abundantly clear that this bar does not apply in cases where the obligation to file the return is u/s 139(4A). Thus clause (a) of section 271(3) does not apply to Trusts. Under clause (d) of sub-section (3) the bar is not for imposition of penalty but for the maximum amount of penalty imposed. Where the penalty has been imposed under clause (i) of sub-section (1) and no penalty has been imposed under clause (iii) of that section read with Explanation 3, clause (d) of sub-section (3) has no application. Section 271(3)(d) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of the case, we are of the firm view that Section 271(3)(d) of the Income-tax Act, 1961 is not applicable to the facts of this case. 7. The AAC has relied upon the decision of the ITAT in Trade Development Authority's case for cancellation of penalty. We find that the penalty in that case has been deleted on two counts, viz., that penalty imposable u/s 271(3)(d) works out to nil as no tax was found payable by the authorities. Secondly, the Tribunal found that there was a reasonable cause for the delay in the filing of the return. The relevant portion of this decision relating to applicability of section 271(3)(d) is quoted hereunder for ready reference : " The learned counsel also referred to the provision of law under which no pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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