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TMI Blog2004 (4) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), made by the Income-tax Appellate Tribunal, Patna Bench, Patna to answer the following question of the law: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order passed by the Appellate Assistant Commissioner holding that as the penalty was imposed on the firm for delay in filing the return, no penalty was leviable on the assessee, who was a partner of the firm under section 271(1)(a) of the Income-tax Act, 1961?" In all the ten cases, the same question has been referred and in five reference cases, namely, Tax Cases Nos. 27,28,29,30 and 33 of 1989, the opposite party is Md. Ehtesam and in the other five Tax Cases Nos. 31,32,34,35 and 36 the opposite party is Md. Ezaz. The matter relates to imposition of penalty for not filing the return within time for the assessment years 1973-74, 1974-75, 1975-76, 1976-77 and 1977-78. The matter also relates to the assessment years 1972-73 as well as 1978-79. However, the matter with regard those years is not the subject matter of decision in this case for the reason that the penalty imposed for not fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers/opposite parties filed appeals and the appeals filed by each of them were heard together and were disposed of by two separate orders dated October 11, 1984. The appellate authority reduced the amount of penalty for the assessment year 1972-73 and with regard to the assessment year 1978-79, the appellate authority found that as the date for filing the return was July 31,1978, and both the assessees/partners/opposite parties filed the return on April 23, 1980, and there was no reasonable cause for not filing the return and accordingly upheld the order of penalty imposed by the Income-tax Officer. So far as the penalty imposed for other assessment years, the appellate authority held that the firm is not a legal person or juridical entity and any tax imposed on a firm is in fact, a tax upon the partners and similarly penalty on the firm is a penalty on the partners and once the penalty has been imposed on the firm under section 271(1)(a) of the Act, the penalty cannot be levied again upon the partners and as in the case in hand, the penalty has already been imposed on the firm by the Income-tax Officer, the penalty was not leviable upon the partners for the assessment years 1973- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional tax has been imposed on the firm, which in substance, is penalty on the partners, the partners cannot again be penalised under section 271(1)(a) of the Act. He also submitted that even if it is treated that the firm and partners are different entities and penalty can be imposed against both under section 271(1)(a) of the Act, in view of the admitted fact that the only source of income of the partners was the income from the firm and as the firm has not filed the return, the partners did not know the share of the income and as such they also did not file the return and therefore, there was reasonable cause for not filing the return within time and the appellate authority rightly cancelled the penalty order passed by the Income-tax Officer. In support of his submission, he relied upon the decisions (Venkateswara Power Rolling Mills v. CIT [1974] 97 ITR 168 (Mys); AMI CIT v. Smt. Triveni Devi [1974] 97 ITR 390 (All); CIT v. Pratap Chand Maheshwari [1980] 124 ITR 653 (P H); CIT v. Baijnath Chopolia [1976] c 102 ITR 551 (Orissa); Madan Lamba v. CIT [1983] 139 ITR 849 (Delhi) and CIT v. R. Sridhar [2003] 263 ITR 586 (Mad)). The Madhya Pradesh High Court in the cases of Amritl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the same offence. As already pointed out above, penalty levied upon an unregistered firm is in fact a penalty imposed upon the partners so that the imposition of penalty in respect of the same income in the hands of the partners would amount to double punishment. No provision has been brought to our notice under which such a course can be adopted." The Punjab and Haryana High Court also considered the said question in the case of CIT v. Pratap Chand Maheshwari [1980] 124 ITR 653 and followed the judgment rendered by the Allahabad High Court in the case of Addl. CIT v. Smt. Triveni Devi [1974] 97 ITR 390 and distinguished the decision of the Madhya Pradesh High Court in Amritlal Somabhai [1979] 116 ITR 833 on the ground that the question of double penalty was not considered at all in the case of Amritlal Somabhai [1979] 116 ITR 833 by the Madhya Pradesh High Court. Thus, the Punjab and Haryana High Court also held that once the penalty has been imposed upon the firm under section 271(1)(a), penalty cannot be imposed again on the partners as the penalty imposed on the firm is, in fact, a penalty imposed on the partners. The settled law is that the firm is not a legal entity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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