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TMI Blog1969 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... 961 (hereinafter called the "new Act"). The assessee, Messrs. Venichand Maganlal, Sagwara, is a registered firm. It was called upon to file a return of its income under section 22(2) of the Indian Income-tax Act, 1922 (hereinafter called the "old Act"), which was served on 26th May, 1961. The return was due on 1st July, 1961, but was filed on 5th November, 1962. For this default, the Income-tax Officer, C-Ward, Udaipur, imposed a penalty of Rs. 4,380 under section 271(1)(i) of the Income-tax Act, 1961, at the rate of 2% of the tax for each month of default. The appeal to the Appellate Assistant Commissioner, Jodhpur, by the assessee was dismissed. On second appeal by the assessee, the Tribunal took the view that the measure of penalty for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Tribunal that the quantum of penalty should be in accordance with the law in force at the time when the default was committed. Now there remains only the question whether under section 271(1)(i) it was permissible for the Tribunal to impose lesser penalty than what has been imposed by the Income-tax Officer. The relevant part of section 271 runs as follows : "271. Failure to furnish returns, comply with notices, concealment of income, etc.-(1) If the Income-tax Officer or the Appellate Assistant Commissioner, in the course of any proceedings under this Act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish under sub-section (1) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Section 271(1)(i) speaks in unequivocal terms that in the cases referred to in clause (a) a sum equal to 2% of the tax for every month during which the default continues, but not exceeding in the aggregate 50% of the tax was to be the amount of penalty. This means that the penalty to be imposed is to be calculated at 2% of the tax for every month during which the default continues, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gujarat Chamber of Commerce, the matter has been reconsidered by the Board in consultation with the Ministry of Law. Under section 271(1)(i) of the Income-tax Act, 1961, the penalty is to be 2% of the tax, if any, payable by the assessee. Section 219 of the Income-tax Act, 1961, makes it clear that any sum, other than penalty or interest, paid by or recovered from the assessee as advance tax in pursuance of Chapter XVII shall be treated as payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable and credit, therefore, shall be given to the assessee in the regular assessment. The two sections read together make ..... X X X X Extracts X X X X X X X X Extracts X X X X
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