COMMISSIONER OF INCOME TAX Vs. CEANATTU FIRMS

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Cochin Bench, has referred the following questions of law to this court, under Section 256(1) of the Income-tax Act, 1961 (" the Act" for short).

(2.) THE assessee, a registered firm, filed its return of income relating to the assessment year 1974-75, on May 24, 1975. He was bound to pay the tax due as per the return within thirty days after filing the return as per the provisions of Section 140A(1) of the Act as it stood at the relevant time. THE assessee did not comply with this requirement of the law and the Income-tax Officer initiated penalty proceedings as per notice dated August 5, 1975. By order dated October 17, 1977, the Income-tax Officer imposed a penalty of Rs. 5,000 for the default of the assessee for non-payment of the tax due as per the return until March 31, 1976, and a further penalty of Rs. 8,868 for the continued default till September 3, 1977, on which date a final order of assessment was passed.

(3.) SECTION 140A was further amended by the Taxation Laws (Amendment) Act, 1975, and the amended section came into force with effect from April 1, 1976. Sub-section (1) of SECTION 140A as amended in 1976 required the assessee to pay the tax due on self-assessment and produce proof of such payment along with his return. Sub-section (3) empowers the Income-tax Officer to impose a penalty at the rate of 2% of the tax due for every month during which the default continues.