Bombay High Court
Commissioner Of Income-Tax vs J. Pitambardas And Co. on 24 November, 1993
Equivalent citations: [1995]216ITR172(BOM)
Author: Sujata V. Manohar
Bench: Sujata V. Manohar
JUDGMENT
D.R. Dhanuka J.
1. The Income-tax Appellate Tribunal has referred the following question to this court for its opinion at the instance of the Revenue under section 256(1) of the Income-tax Act, 1961 :
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has rightly confirmed the order of the Commissioner of Income-tax (Appeals), cancelling the penalty order under section 140A(3) of the Income-tax Act, 1961 ?"
2. The relevant assessment year is the assessment year 1972-73.
3. The assessee filed its return of income for the relevant year on July 31, 1972, showing an income at Rs. 4,15,600. The assessee did not pay the self-assessment taxes in accordance with the said return. A sum of Rs. 98,284 was the income-tax payable by the assessee as and by way of self-assessment. The Inspecting Assistant Commissioner of Income-tax initiated penalty proceedings against the assessee for non-payment of self-assessed tax according to its own return. The Inspecting Assistant Commissioner rejected the explanation of the assessee and levied penalty in a sum of Rs. 28,000 as contemplated under section 140A(3) of the Income-tax Act, 1961. The said amount of penalty was computed on the footing of 15 per cent. interest per annum on self-assessed tax for delayed payment.
4. By order dated September 29, 1978, the Commissioner of Income-tax (Appeals) cancelled the penalty. By order dated October 31, 1979, the Income-tax Appellate Tribunal dismissed the appeal filed by the Revenue. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal treated section 140A(3) as non-existent in view of a decision of the Madras High Court referred to hereinafter declaring the said section as unconstitutional although the said section was upheld by the High Court of Andhra Pradesh and there was a conflict of judicial opinion on the subject.
5. By its judgment dated December 6, 1972, in the case of A. M. Sali Maricar v. ITO [1973] 90 ITR 116 (Mad), the High Court of Madras had held that section 140A(3) of the Income-tax Act, 1961, was violative of article 14 of the Constitution of India. By its judgment dated December 10, 1975, in the case of Kashiram v. ITO and Prahlad Rai Goel v. ITAT [1977] 107 ITR 825, the High Court of Andhra Pradesh held that section 140A(3) was valid and not ultra vires. The High Court of Andhra Pradesh dissented from the view taken by the High Court of Madras in the abovereferred case reported in Sali Maricar (A. M.) v. ITO [1973] 90 ITR 116. The Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal erroneously assumed that the abovereferred decision of the High Court of Madras was the only decision on the subject and no other High Court had taken a different view on the validity of the section. At the time when the order was passed by the Commissioner of Income-tax (Appeals) on September 29, 1978, the abovereferred judgment of the High Court of Andhra Pradesh was also in force. Similarly, on the date, when the Income-tax Appellate Tribunal decided the second appeal preferred by the assessee, the abovereferred judgment of the High Court of Andhra Pradesh was very much in existence. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal erred in ignoring section 140A(3) of the Act and treating the same as non-existent. Both the authorities erroneously assumed that the abovereferred Madras judgment was the only judgment of a competent High Court available on the subject. If the assessee desired to impugn the validity of section 140A(3) of the Act, the assessee ought to have been directed to file a writ petition in this court or before the Supreme Court. No such writ petition was filed by the assessee.
6. We are informed by learned counsel of both the sides that several High Courts have now taken the view that section 140A(3) of the Act is valid. Learned counsel for the assessee has invited the attention of the court to the judgment of this court in the case of CWT v. Devidayal Stainless Steel India P. Ltd. [1991] 189 ITR 506 to which one of us Mrs. Sujata V. Manohar J. was a party. In this judgment, our court considered the decisions of various High Courts on the subject upholding the validity of the abovereferred section. Following the ratio of the decision of this court in the abovereferred case in CWT v. Devidayal Stainless Steel India P. Ltd. [1991] 189 ITR 506, we answer the question referred to us in the negative and in favour of the Revenue. Having regard to the facts and circumstances of the case, there shall be no order as to costs.