Madhya Pradesh High Court
Kaluram Ladharam vs Comissioner Of Income-Tax. on 7 March, 1989
Equivalent citations: (1990)78CTR(MP)136, [1990]184ITR294(MP)
JUDGMENT
The judgment of the court was delivered by G.G. SOHANI, ACTG. C.J. - By this reference under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was liable to pay penalty under section 271(1)(a) read with sub-section (2) of section 271 of the Income-tax Act in spite of the fact that the assessee had no assessed tax in terms of the explanation to section 271(1)(i)(b) of the Income-tax Act, 1961 ?"
The material giving rise to this reference, briefly, are as follows : The assessee is assessed in the status of a registered firm. As there was delay on the part of the assessee in filing its return for the assessment year 1977-79, the Income-tax Officer initiated proceedings under section 271(1)(a) of the Act, after taking into consideration the explanation of the assessee. The Income-tax Officer held that the assessee failed to make out that there was a reasonable causes for the delay in filing the return. The Income-tax Officer, therefore, levied penalty under section 271(1)(a) of the Act. The appeal preferred by the assessee before the Appellate Assistant Commissioner was dismissed. Aggrieved by the assessee before the Tribunal, the assessee sought a reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this court for its opinion.
Shri Goyal, learned counsel for the assessee, contended that in view the decision of the Supreme Court in Ganesh Dass Sreeram v. ITO [1988] 169 ITR 221, the Rajasthan High Court has held in CIT v. Builders Engineers Co., [1989] 175 ITR 317, that in cases where there is no tax liability within the meaning of the expression "assessed tax" given in Explanation to sub-clause (i)(b) of clause (a) of sub-section (1) of section 271 of the Act, under section 271(1)(a) of the Act could be imposed on the assessee.
The decision of the supreme court in Ganesh Dass Sreeram v. ITO [1987] 169 ITR 221 deals with the question of charging a registered firm with interest when the return is filed by it beyond time but the entire amount of tax is paid by way of advance tax, the Supreme Court held that regard being had to the fact that payment of the interest was only compensatory in nature, the question of payment of any compensation did not arise when the entire amount èof tax was paid by the way of advance tax, this decision is not attracted in consideration the question of imposition of penalty under section 271(1)(a) of the Act. In Delux Publishing Co. v. Addl. CIT [1982] 127 ITR 782 (MP) and CIT v. Bhabuti Contractor [1990] 183 ITR 445 (MP) (Misc. civil case No. 43 of 1983 decided on 13-3-1987 (Gwalior Bench)), two Division Bench of this court have held that in cases covered by section 271(2) of the Act, in order to calculate penalty, the tax payable by the assessee on the income assessed has to be determined on the basis that the assessee is an unregistered firm and penalty has to be calculated on the tax so determined. Following these decisions, it must be held that the Tribunal was right in holding that the assessee was liable to pay penalty under section 271(1)(a) of the Act read with section 271(2) of the Act.
For all these reasons, our answer to the question referred to this court is in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.