COMMISSIONER OF INCOME TAX Vs. GAIN TALKIES

JUDGEMENT

(1.) THIS petition under s. 256 (2) of the IT Act, 1961 (hereinafter referred to as the Act) has been filed by the CIT, Amritsar-II, Amritsar, with the prayer that this Court may issue a direction to the Tribunal to refer the following questions of law to this Court which are said to arise out of the order of the Tribunal, dt. 14th July, 1975 :

(2.) A brief resume of the facts first. The respondent is a registered firm and in respect of asst. yr. 1967-68, the income-tax payable by them was worked out to Rs. 2,330. On the premises that the firm was registered, a penalty was imposed upon the assessee under s. 271 (1)(a) r/w s. 271 (2) of the Act. On appeal, the AAC reduced the penalty to Rs. 5,626, giving the benefit of Rs. 862 paid by the assessee as advance tax, When the matter went up before the Tribunal, vide its order dt. 31st March, 1972, the entire penalty was deleted on the ground that there was no tax payable by the assessee as per demand notice and the question of levy of any penalty did not arise. The Revenue thereafter filed an application under s. 256 (1) of the Act, against the order of the Tribunal. However, before the reference was considered, an application was filed by the Department for rectification, in which the Tribunal found that its judgment had been influenced by the fact of the payment of Rs. 1,468 under s. 140A, which had been pointed out by the Deptl. Rep. as incorrect. The Tribunal, therefore, restored the appeal for being disposed of afresh. After hearing the appeal again, the Tribunal reiterated its view that its earlier finding contained in para 8 of their order, dt. 31st March, 1972, was correct. This finding, in substance is that the penalty could not be levied because there was no tax payable within the meaning of s. 271 (1)(i) of the Act. The appeal of the respondent was, thus, allowed.

(3.) ANOTHER development took place in the meantime. Sec. 27 (1)(i) of the Act was amended vide s. 13 of the Direct Taxes (Amendment) Act, 1974. The above-mentioned section, after amendment, reads as under :