CIT Vs. CHAUHAN BROS.

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for opinion to this court: - 'Whether on the facts and in the circumstances of the case and having due regard to the provisions of section 271(2) of the Income Tax Act, 1961, the Tribunal was legally correct in upholding the Deputy Commissioner (Appeals)'s action in cancelling the penalty levied under section 271(1)(a) of the Act ?'

(2.) BRIEFLY stated the facts giving rise to the present reference are as follows: - The reference relates to the assessment year 1984 -85. The assessee -respondent is a registered partnership firm for the assessment year 1984 -85. The return of income was filed late by more than 29 month on 15 -1 -1987. The penalty proceedings under section 271(1)(a) of the Act were initiated and after affording opportunity of hearing a sum of Rs. 15,140 was imposed as penalty. The assessing officer, while levying the penalty, assessed the tax on the basis of the tax payable by the assessee as if it were an unregistered firm in accordance with the provisions of section 271(1)(a) of the Act. However, the penalty was deleted in appeal by the Deputy Commissioner (Appeals) on the ground that the tax deducted at source exceeded the tax payable by the assessee as registered firm. This order has been confirmed in further appeal by the Tribunal.

(3.) SECTION 271(1)(a) of the Act provides that the Income Tax Officer in the course of any proceeding under this Act if it is satisfied that any person has failed to furnish return of total income which he was required to furnish under sub -section (1) of section 139 or by notice given under sub -section (2) of section 139 or section 148 or has failed to furnish it within the time allowedin the manner required by sub -section (1) of section 139 or by such notice as the case may be, may direct that such person shall pay penalty. Sub -section (2) of section 271 of the Act reads as follows: - 'When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, then notwithstanding the fact that anything contained in the other provisions of this Act, the penalty imposable under sub -section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.'