COMMISSIONER OF INCOME TAX Vs. LOHIYA TRADING CO

JUDGEMENT

(1.) The Commissioner of Income-tax, Andhra Pradesh-II, seeks reference of the following two questions of law arising out of the orders of the Income-tax Appellate Tribunal by which the Tribunal accepted the assessee's contention regarding the mode of calculation of penalty payable :

(2.) The respondent is a registered firm and penalty was levied under section 271(1)(a) for the delay in filing the return of income. On a consideration of the additional ground raised by the assessee, the Tribunal held that when once the registered firm is treated as an unregistered firm for purposes of levying penalty, all consequences incidental thereto should follow and, therefore, the rate of tax applicable to an unregistered firm and also the amount of advance tax referable to an unregistered firm, whether paid or not, becomes applicable. The Tribunal concluded as follows :

(3.) The Tribunal declined reference on the ground that the case does not raise a debatable question of law which ought to be decided by the High Court. We are unable to agree with the Tribunal. The question raised as regards the calculation of penalty leviable on an unregistered firm in accordance with the provisions of section 271(1), in our view, give rise to an arguable question of law. There is no direct decision of this court on the point. Though learned counsel for the respondent relied on some of the observations in P. Venkata Krishnayya Naidu and Son v. CIT [1984] 150 ITR 545 (AP), we do not think that the ratio of that judgment directly gets attracted to the present case. We are not at all sure that the said judgment comes to the aid of the respondent, as the question involved therein was not identical.