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TMI Blog1986 (1) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ke which the Appellate Assistant Commissioner could rectify as a mistake apparent from the record ?" The sole question referred as arising out of I.T.A. Nos. 460 and 461 of 1977-78 and question No. 1 arising out of I.T.A. Nos. 650 and 651 of 1977-78 are the same. If the answer to these questions is in the affirmative, question No. 2 in the latter reference does not arise. These references relate to the assessment year 1975-76 with respect to two assessees, one a firm and the other a partner of the firm. I.T.R. Nos. 356 and 357 of 1980 relate to the firm and I.T.R. Nos. 358 and 359 of 1980 relate to the partner. The firm submitted its return for the accounting year ending on August 16, 1974 (Malayalam year 1149), on January 28, 1976, disclosing an income of Rs. 1,85,840. The balance tax payable after adjusting advance tax paid as per the return was Rs. 26,662. The tax as per the return on self-assessment was not paid within the period of thirty days as required by section 140A of the Income-tax Act as it stood on the date on which the return was filed. The Income-tax Officer by his order dated February 5, 1977, imposed penalty of Rs. 4,000 for the default in compliance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as required by the amended provision of section 140A. The Appellate Assistant Commissioner, on the same view as he had expressed in the connected case relating to the firm, dismissed the application, as not falling within the scope of section 154 of the Act. In two separate appeals by the Department, the Income-tax Appellate Tribunal confirmed the decision of the, Appellate Assistant Commissioner. Sub-sections (1) and (3) of section 140A of the Income-tax Act as they stood on the date on which the return was filed are extracted below : "140A. Self-assessment.-(1)Where are turn has been furnished under section 139 and the tax payable on the basis of that return as reduced by any tax already paid under any provision of this Act exceeds five hundred rupees, the assessee shall pay the tax so payable within thirty days of furnishing the return... (3) If any assessee fails to pay the tax or any part thereof in accordance with the provisions of sub-section (1), he shall, unless a regular assessment under section 143 or section 144 has been made before the expiry of the thirty days referred to in that sub-section, be liable, by way of penalty, to pay such amount as the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). There was no such requirement prior to the amendment and it cannot be said that the assessee in these cases had committed default of compliance to the amended provision of sub-section (1) of section 140A. Sub-section (3) did not, prior to its amendment, prescribe any fixed penalty and the imposition of penalty at the relevant time was within the discretion of the Income-tax Officer. It is open to the appellate authority to reduce the penalty especially in a case like this where it has been found that the default was not wilful. Counsel for the Revenue relies on the decision of a Full Bench of this court in Saidu Muhammad v. Bhanukuttan [1967] KLT 947, in support of his proposition that the assessees are liable to penalty under the amended provisions of section 140A of the Income-tax Act. The Full Bench decision related to the default in payment of profession tax. The Travancore. Cochin Panchayats Act provided for the recovery of arrears of tax by resort to the Revenue Recovery Act. It did not, however, provide any other mode of recovery, nor did the act make non-payment an offence. The Travancore-Cochin Panchayats Act was repealed by the Kerala Panchayats Act, 1960, as per wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Income-tax Act, 1922, or under section 271(1)(a) of the 1961 Act. The Supreme Court held that the penalty proceedings are not necessarily a continuation of the assessment proceedings and the scheme of sections 274(1) and 275 of the Act was that the order imposing penalty must be made after the completion of the assessment. Counsel relies on the following observations of the Supreme Court (at page 341) : "The imposition of penalty not confined to the first default but with reference to the continued default is obviously on the footing that non-compliance with the obligation of making a return is an infraction as long as the default continued. Without sanction of law, no penalty is imposable with reference to the defaulting conduct. The position that penalty is imposable not only for the first default but as long as the default continues and such penalty is to be calculated at a prescribed rate on monthly basis is indicative of the Legislative intention in unmistakable terms that as long as the assessee does not comply with the requirements of law, he continues to be guilty of the infraction and exposes himself to the penalty provided by law." The Supreme Court in that case re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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