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TMI Blog1998 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... cting Assistant Commissioner, Agricultural Income-tax and Sales tax, Ernakulam. For the assessment years 1982-83 and 1983-84, the assessee filed revised returns on July 28, 1987, and May 14, 1988, declaring a total income of Rs. 5,89,404 and Rs. 2,69,459, respectively, as his share income from the firm known as "Pembra Coffee Plantation". Since the assessee was liable to pay the admitted tax along with the returns, it was not paid due to paucity of funds. The assessee therefore filed applications before the Inspecting Assistant Commissioner on July 28, 1987, and May 14, 1988, seeking permission to remit the arrears of tax in monthly instalments. Though no formal orders had been passed by the Commissioner on the said applications, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be imposed are matters which the Commissioner has to consider and enter a finding thereon. As against the said judgment of the learned single judge, the State has filed the present Writ Appeal No. 827 of 1991. Pursuant to the judgment of this court in O. P. No. 2527 of 1991, the Commissioner of Agricultural Income-tax passed an order on December 2, 1991. Though the Commissioner has considered the revision petition and affidavit filed by the assessee on March 27, 1991, the revision petition was however dismissed. That order has been challenged by the assessee in O. P. No. 2671 of 1992. Thus, the substantial question to be decided in the writ appeal as well as in O. P. No. 2671 of 1992 is one and the same. Section 17A of the Act deals w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat view of the matter, the learned judge remitted the case to the Commissioner for fresh decision after considering further representation, if any, to be made by the assessee. However, the Government Pleader challenges the above observation of the learned judge. On the other hand, counsel for the assessee challenges the order of the Commissioner dated December 2, 1991 (exhibits P-6 in O. P. No. 2671 of 1992), dismissing the revision observing that the assessing authority had not demanded penalty at the rate higher than two per cent. of the tax defaulted or delayed. In other words, the Commissioner took the view that the assessing authority had no discretionary power while fixing the quantum of penalty. Therefore, while deciding this questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." (emphasis supplied) While dealing with the constitutional validity of section 48 of the Haryana General Sales Tax Act on the ground of article 14, the Supreme Court in Shiv Dutt Rai Fateh Chand v. Union of India [1984] 148 ITR 664, observed that the order levying penalty is quasi-judicial in character and involves exercise of judicial discretion. The degree of remissness involved in the default is a relevant factor to be taken into account while levying penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee explains the circumstances to the satisfaction of the Income-tax Officer, he would not be exposed to penalty. The Division Bench of the Madhya Pradesh High Court in CIT v. Vrajlal Manilal and Co. [1981] 127 ITR 512, a case coming under section 140A(3) of the Income-tax Act, 1961, followed the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26. The Calcutta High Court in CIT v. Wesman Engineering Co. (P.) Ltd. [1976] 104 ITR 605, has observed that sub-section (3) of section 140A of the Income-tax Act does not cast an absolute duty on the Income-tax Officer to levy penalty on the failure of the assessee to pay the tax due on self-assessment within thirty days of furnishing his return. Under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contumacious conduct on his part in not making the payment of tax along with the return. If he succeeds in this, the assessing authority can absolve him from payment of penalty. As far as the present case is concerned, the assessee has filed a detailed affidavit before the Commissioner stating that he was not wilfully evading the payment of tax and the non-payment was due to paucity of funds. The Commissioner, according to us, failed to apply the principles governing the levy of penalty for the failure to pay the tax along with the return for the reason of the paucity of funds. In this context, we point out that the Division Bench of this court in CIT v. Chembara Peak Estates Ltd. [1990] 183 ITR 471 observed : "Paucity of funds and financ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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