COMMISSIONER OF INCOME TAX Vs. MODELLA PRIVATE LIMITED

JUDGEMENT

(1.) IN this reference the following two questions have been referred to the High Court under s. 256(1) of the I.T. Act, 1961, at the instance of the Commissioner :

(2.) THE assessee is a private limited company doing business as managing agents. We are concerned in this reference with the assessment year 1965 -66, the corresponding previous year being the year ended March 31, 1965. The order which was ultimately given rise to this reference was an order levying a penalty of Rs. 30,000 (reduced by the AAC to Rs. 20,000) under s. 221(1) of the I.T. Act, 1961, for this assessment year.

(3.) THE assessee carried the matter in appeal to the AAC. It was also objected that the quantum of penalty levied was unduly high. The AAC reduced the penalty to Rs. 20,000 but did not uphold any of the objections raised against the levy of the penalty in principle. The AAC, inter alia, considered the objections advanced on behalf of the assessee to the revised demand raised by the ITO on February 15, 1965. In this view, although the argument was attractive at first blush, on a close look the same had to he rejected. According to the AAC, what is contemplated by the words 'tax is paid by the assessee under section 140A' is that the ITO can proceed against the assessee with reference to the tax payable on the basis of the return for the purpose of amending the notice for advance tax under s. 210(3). In his view, it was necessary to read the word 'paid' as payable, as otherwise the whole provision contained in s. 210 would be rendered nugatory and meaningless. Accordingly, the said contention was rejected as was another with which we are not concerned in view of the ultimate conclusion reached by us. The AAC, as stated earlier, however, reduced the penalty to Rs. 20,000.