COMMISSIONER OF INCOME TAX Vs. R SRIDHAR

JUDGEMENT

(1.) IN pursuance of the directions of this Court, the Tribunal has stated the case and referred the following question of law for consideration under S. 256(1) of the IT Act, 1961 (hereinafter to as 'the Act').

(2.) THE assessment years involved are 1984-85 to 1986-87. The assessee is a partner in two firms viz., M/s S.S. Builders and M/s K.C. Builders and the penalty proceedings under S. 271(1)(a) of the Act were initiated against both the firms due to the delayed filing of its returns of income and the penalties were also imposed on the two firms for the asst. yrs. 1984-85 to 1986-87. The assessee as a partner in the firm also delayed in filing his returns of the income for the assessment years in question and the AO imposed on the assessee penalties of varying amounts for the asst. yrs. 1984- 85 and 1985-86 for the delayed filing of returns under S. 271(1)(a) of the Act, which was confirmed by the CIT(A). The Tribunal, however, took a different view and held that since the firms in which the assessee along with other partners were penalised for late filing of the return, the assessee or any other partner again cannot be penalised under S. 271(1)(a) of the Act for late filing of their individual returns as it would amount to penalising the assessee again for the same offence viz., late filing of the return and allowed the appeal. The Revenue has challenged the order of the Tribunal and hence the tax case.

(3.) MR . C.V. Rajan, learned counsel for the assessee in his fairness brought to the attention of this Court the decision of the Allahabad High Court in Addl. CIT vs. Smt. Triveni Devi (1974) 97 ITR 390 (All) and the decision of the Punjab and Haryana High Court in CIT vs. Pratap Chand Maheshwari (1980) 14 CTR (P&H) 410 : (1980) 124 ITR 653 (P&H), where both the Courts have taken a view that the penalty cannot be levied once in the hands of the firm and again in the hands of a partner. It is relevant to mention here that the decision of the Allahabad High Court dealt with the case of penalty for concealment of income and the Punjab and Haryana High Court dealt with the case of penalty for the failure to file the estimate of the advance tax. However, both the decisions have been considered by the Delhi High Court in a detailed manner in Madan Lamba vs. CIT (1982) 28 CTR (Del) 96 : (1983) 139 ITR 849 (Del) and S. Ranganathan, J. (as His Lordship then was) speaking for the Bench has considered various possibilities in the matter of levy of penalty on the partner and ultimately laid down the law as under :