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TMI Blog1984 (6) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. When the matter came before the AAC, it was pleaded before him that the penalty was wrongly imposed without affording a reasonable opportunity to the assessee. It was also contended that on the completion of the assessment, the ITO had issued a demand notice showing nil demand. As the tax payable on the assessee as a registered firm was lesser than the tax paid in advance at Rs. 11,052, it was contended that the tax payable being nil, no penalty could be imposed in this case. It was contended that the advance tax paid was more than the tax payable by the firm and hence no penalty was leviable. The AAC accepted this plea and held that no penalty was leviable. 4. In the departmental appeal before us the plea of the department is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted at source was more than the tax found payable by the assessee as a registered firm. The assessee had paid Rs. 11,052 as tax deducted at source and the tax found payable on the assessment after reduction in appeal was less than that. The question, however, for consideration is whether where there is a delay in the filing of the return and there is no reasonable cause, penalty can be imposed on the basis of the firm's tax being calculated as unregistered firm as provided under law. On this question there is a difference of opinion between the High Courts. In the case of CIT v. R. Ochhavlal Co. [1976] 105 ITR 518, the Gujarat High Court held that while the function of clauses (a), (b) and (c) is to create penal liability, the functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, upheld the imposition of penalty in the case of a default without reasonable cause, if the tax payable by the unregistered firm could give a positive figure for imposition of penalty. 7. A contrary view has been taken by the Gauhati High Court in the case of Maskara Tea Estate. In this case it was held that section 271(2) was not attracted in that case where the tax paid was more than the tax payable by the registered firm. Reliance had been placed on the decision of the Supreme Court in the case of Vegetable Products Ltd. Their Lordships specifically dissented from the decision of the Gujarat High Court, referred to above. 8. We further find that this question was considered by the Calcutta High Court in the case of CIT v. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were deciding the issue independent of the conflicting views of the different High Courts on section 271(1)(a) and that matter was decided on an interpretation of the provisions of section 139(8)(a) read with Explanation 2. In this decision it was held that where the advance tax paid was more than the tax found payable by the registered firm, no interest could be levied under section 139(8) on the basis that the firm was an unregistered firm. As the Special Bench has itself excluded the operation of that order from penalties under section 271(1)(a), we leave at that. We may, however, mention that an argument is advanced that if there is any tax payable by the registered firm, after adjusting the advance tax then the provisions for calcula ..... X X X X Extracts X X X X X X X X Extracts X X X X
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