COMMISSIONER OF INCOME TAX Vs. KHUBCHAND MEGHRAJ

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961.

(2.) THE reference has been made at the instance of the Commissioner of Income-tax. THE assessee filed a return in respect of the assessment year 1960-61 on 2nd August, 1961. THE Income-tax Officer completed the assessment on 13th March, 1962, but on the application of the assessee itself, this order was set aside and the assessment reopened. After reopening of the assessment, a fresh assessment was made on 23rd October, 1962, that is, after the Income-tax Act, 1961, had come into force. After this assessment had become final, proceedings for imposition of penalty under Section 271(1)(a) of the Income-tax Act, 1961, were started against the assessee for filing the return late. THE Income-tax Officer did not accept the explanation given by the assessee and imposed a minimum penalty of 2% by virtue of the provisions of Section 297(2)(g) of the Act of 1961. THE appeal filed by the assessee was also dismissed, but on second appeal to the Tribunal, it was argued that Section 297(2)(g) merely made the procedure of the 1961 Act applicable, but the quantum of penalty could be imposed under the Act of 1922 and, consequently, there was no minimum which was to be imposed in such cases. THE Tribunal, relying upon a decision of the Supreme Court in a criminal matter in Rao Shiv Bahadur Singh v. State of V.P, AIR 1953 SC 394. held that the quantum of punishment could not exceed that which was prescribed under the law at the time of the commission of the offence and, consequently, reduce the penalty from 2% to Rs. 1,000 in a lump sum. Against that order, the Commissioner of Income-tax asked for a deference and the following question has been referred to this court:

(3.) IN view of the above authorities, there is no doubt that the imposition of penalty in this case had to be according to the provisions of Section 271(1)(a) which provides a minimum of 2% in the case of delayed filing of return. The INcome-tax Officer had imposed this minimum penalty and, consequently, the Tribunal had no power to interfere with that imposition of penalty and to reduce it below the minimum. We, accordingly, answer the question referred to this court as follows: