COMMISSIONER OF INCOME TAX Vs. DINESH PHARMACEUTICALS

JUDGEMENT

(1.) THIS is an application under sub-s. (2) of S. 256 of the IT Act, 1961 (the Act) filed at the instance of the CIT Meerut. The prayer in the application is that the order of the Tribunal does give rise to the following question which is of law and the Tribunal may be directed to draw up a statement of the case and refer the same for the opinion of this Court.; Whether on the facts and in the circumstances of the case, the Tribunal was correct in law to sustain the order of CIT (A) cancelling the penalty under S. 272 (2) (c) of the IT Act, We have heard the learned counsel for the parties.

(2.) THE application arises from the penalty proceedings under S. 272A (2) (c) of the Act in relation to the asst. yr. 1989-90 for failure of the assessee to furnish the return within the prescribed time in Form 27A as a result of which the assessee was subjected to a penalty of Rs. 71,500 The respondent assessee is a registered firm engaged in the business of purchase and sale of medicines. The assessee-firm consisted of two partners mother and son, namely, Smt. Sushila Devi and Sri D.G. Goel. During the previous year relevant to the assessment year under consideration the assessee credited certain amounts of interest in the accounts of the family members of the partners on their old brought forward balances. The amount of interest payable in each account was likely to exceed Rs. 2,500 during the year but the aggregate amount in each account was for below the taxable limit and the depositors having no other source of income had furnished to the assessee statement writing in the prescribed Form No. 15A. before 31st March, 1989 The assessee therefore, did not deduct any tax at source at the time of crediting the amounts of interest to the respective accounts in accordance with the provisions of proviso to S. 194A (1) of the Act. However, in terms of S. 206 of the Act r/w r. 3AA of the IT Rules, 1962 the assessee was required to furnish the return in From No. 27A within 30 days from 31st March, 1989, and as no such return was furnished the concerned IT Authority called upon the assessee to explain as to why the penalty under S. 272A (2) (c) be not imposed for its failure in furnishing the return in Form No. 27A within the prescribed limit. The concerned authority stated that no reply in response to the show-cause notice was filed and it proceeded to impose a penalty of Rs. 71,500 under S. 272A (2) (C) on the finding that the assessee had without reasonable cause failed to furnish the return in Form No. 27A within the prescribed time. The penalty was calculated taking the default period as 715 days.

(3.) SEC . 272A (2) (c) envisages that if any person fails to furnish in due time any of the returns, statements or particulars mentioned in S. 133 or S. 206 or S. 206C or S. 285B shall pay, by way of penalty, a sum which shall not be less than one hundred rupees, but which may extend to two hundred rupees, for every day during which the failure continues.