COMMISSIONER OF INCOME TAX Vs. VENICHAND MAGANLAL

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal, Delhi Bench "C" (hereinafter called "j:he Tribunal"), under Section 256(1) of the:,Income-tax Act, 1961 (hereinafter called the "new Act").

(2.) THE assessee, Messrs. Venichand Maganlal, Sagwara, is a. registered firm. It was called upon to file a return of its income under Section 22(2), of the Indian Income-tax Act, 1922 (hereinafter called the "old Act"), which was served on 26th May, 1961, THE. return was due oil 1st July, ,1961, but was filed on 5th November, 1962. For this default, the Income-tax Officer, C-Ward, Udaipur, imposed a penalty of Rs. 4,380 under Section 271(1)(i) of the Income-tax Act, 1961, at the rate of 2% of the tax for each month of default. THE appeal to the Appellate Assistant Commissioner, Jodhpur, by the assessee was dismissed. On second appeal by the assessee, the Tribunal took the view that the measure of penalty for a default must be in accordance with law which was in force at the time when the default was made. THE Tribunal held that the default of delay in filing the return was committed when the old Act was in force and as there was no limit with regard to the minimum amount of penalty imposable, the Tribunal took the view that it could reduce the penalty. THE Tribunal further held that Section 271(1)(i) of the new Act did not lay down any restriction with regard to the minimum penalty imposable and as such any amount of penalty could be imposed which may be less than the amount imposed as penalty, though it may be less than the sum at the rate of 2% of the income-tax for every month during which the default continues. THE Tribunal reduced the penalty to Rs. 200.