VOLGA RESTAURANT Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference at the instance of the assessee and pertains to the asst. year 1961 -62. The question of law referred for our opinion is as follows: "Whether, on the facts and in the circumstances of the case, the penalty levied under S. 271(1)(a) was liable to be cancelled on the ground that on the date of the imposition of penalty there was no tax liability outstanding against the assessee ?"

(2.) THE assessee is a registered firm which runs the Volga Restaurant. In the relevant year it was also running the Janpath Hotel on behalf of the Government. On 13th June, 1961, the assessee was served with a notice under S. 22(2) of the Indian IT Act, 1922 (to be referred to as "the 1922 Act") to furnish a return. In accordance with the notice, the return was due on 18th July, 1961. However, the assessee filed a return only on 5th November, 1965. Thereafter, the assessment was completed on 21st March, 1966, under S. 143(3) of the INCOME TAX ACT, 1961 (to be referred to as "the 1961 Act"). The total income assessed was Rs. 1,47,013. The ITO thereupon initiated proceedings for the levy of penalty under S. 271(1)(a) of the 1961 Act, for the default in late filing of the return. He levied a penalty of Rs. 44,272 as there was a delay of fifty months.

(3.) SECONDLY , it was urged that the penalty, if at all leviable, should have been imposed in accordance with the provisions of the 1922 Act and not the 1961 Act. The Tribunal relying on the decision of the Supreme Court in Jain brothers vs. Union of India (1970) 77 ITR 107 (SC), repelled this contention.