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TMI Blog1984 (2) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was right in cancelling the penalty levied under section 271(1)(a) of the Income-tax Act, 1961 ? " The assessee, M/s. Surana Co., Bhilwara, is a registered partnership firm. In respect of the assessment year 1968-69, the assessee was required to file a return of its total income by June 30, 1968. The return was actually filed by the assessee on March 13, 1969, after a delay of over eight months. The assessee had paid a sum of Rs. 4,475 as advance tax under s. 210 of the I.T. Act, 1961 (hereinafter referred to as " the Act "). After the provisional assessment was completed on the basis of the return filed, the assessee further paid a sum of Rs. 1,306 under s. 141 of the Act and, thus, a total sum of Rs. 5,781 was paid by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted to the case, as no explanation was filed by the assessee for late filing of the return and as no reasonable cause preventing it from filing the return within the specified time was disclosed. It was held that the ITO had correctly worked out the penalty amount after allowing the deduction of tax deposited by way of advance tax under s. 210 and that the amount of tax paid under s. 141 after the provisional assessment, could not be taken into consideration for purposes of determining the liability of the assessee for imposition of penalty. However, on further appeal, the Income-tax Appellate Tribunal, Poona Bench, Camp Jaipur, by its order dated July 24, 1973, did not agree with the view taken by the AAC. Following the decision of thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur, filed an application under s. 256(1) for making a reference to this court and the Tribunal has referred the question reproduced above to this court, by its order dated August 8, 1974. It was argued before us on behalf of the Revenue that the assessee incurred the liability for imposition of penalty as soon as he failed, without reasonable cause, to furnish the return of his total income on the due date under s. 139(1) of the Act and as such sub-s. (2) of s. 271 would be attracted and the penalty was rightly determined by the ITO as if the assessee-firm was an unregistered firm. It is urged that the Tribunal was not justified in cancelling the penalty imposed upon the assessee by the ITO and the decision of their Lordships of the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of the Act. Their Lordships held that in determining " the tax payable ", for purposes of imposition of penalty, the tax already paid has to be deducted and, hence, the expression " the amount of the tax, if any, payable by him", referred to in the first part of s. 27 l(1)(a)(i) refers to the tax payable under a demand notice. It was also held that the expression " two per cent. of the tax " occurring in the aforesaid provision also referred to the tax, if any, payable by the assessee as mentioned in the first part. Thus, it was held by their Lordships in the aforesaid case that for calculating penalty leviable under s. 271(1)(a)(i), for failure to file the return of income within the specified time without reasonable cause, the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessee because the entire amount of tax payable by the assessee had already been paid by him before the issue of demand notice has now been rendered a matter of academic interest only on account of the subsequent amendments made in the provisions of s. 271(1)(a)(i) by the Direct Taxes (Amendment) Act, 1974 with retrospective effect. It appears that after the decision of their Lordships of the Supreme Court in Vegetable Products' case [1973] 88 ITR 192, Parliament amended the provisions of s. 271(1)(a)(i) and also added an Explanation thereto, with retrospective effect from April 1, 1962. The basis of quantification of tax for purposes of imposition of penalty under s. 271 (1)(a)(i) has been clarified as " two per cent. of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see does not exceed the maximum amount which is not chargeable to income-tax, a sum not exceeding one per cent. of the total income computed under this Act without giving effect to the provisions of sections 11 and 12, for each year or part thereof during which the default continued ; (b) in any other case, in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the assessed tax for every month during which the default continued; Explanation.-In this clause 'assessed tax' means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C. " Adverting to the facts of the present case, if the amount paid by the assessee by way of tax as a result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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