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P. Subramaniam and Bros. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberT.C. Petition Nos. 411 to 413 of 1975
Judge
Reported in[1977]106ITR508(Mad)
ActsIncome Tax Act, 1961 - Sections 271(1)
AppellantP. Subramaniam and Bros.
RespondentCommissioner of Income-tax
Appellant AdvocateV. Ramachandran, Adv.
Respondent AdvocateJ. Jayaraman and ;Nalini Chidambaram, Advs.
Excerpt:
.....person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case may be. (1) if the income-tax officer or the appellate assistant commissioner in the course of any proceedings under this act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable..........of the income-tax act, 1961, preferred by the assessee, are for a direction to the income-tax appellate tribunal, madras bench, to refer the following questions of law, said to arise out of the order of the tribunal, to this court for decision:'1. whether, on the facts and in the circumstances of the case, the appellate tribunal is right in law in holding that the applicant had not established that the belated filing of the return was on account of any reasonable cause ? 2. whether, on the facts and in the circumstances of the case, the appellate tribunal is right in law in holding that notwithstanding the fact that the return filed by the applicant showed income below the taxable limit there was no reasonable cause for not filing the return ? 3. whether, on the facts and in the.....
Judgment:

Ismail, J.

1. These three petitions under Section 256(2) of the Income-tax Act, 1961, preferred by the assessee, are for a direction to the Income-tax Appellate Tribunal, Madras Bench, to refer the following questions of law, said to arise out of the order of the Tribunal, to this court for decision:

'1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the applicant had not established that the belated filing of the return was on account of any reasonable cause ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that notwithstanding the fact that the return filed by the applicant showed income below the taxable limit there was no reasonable cause for not filing the return ?

3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the explanation offered by the applicant for the delay in filing the return was not reasonable cause for the delay ?

4. Whether, on the facts and in the circumstances of the ease, the Appellate Tribunal is right in law in holding that the penalty in excess of 50% of the tax payable by the registered firm is valid ?

5. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in its interpretation of the provisions of Section 271(2)?

6. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in the computation of the penalty leviable ?'

2. In substance, the only question of law that is argued as arising in this case is the interpretation of Section 271(2) of the Income-tax Act.

3. Section 271(1), as it stood before its amendment in 1974, so far as is relevant, read as follows :

'271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-

(a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be.......

he may direct that such person shall pay by way of penalty,--

(i) in the cases referred to in Clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent of the tax......' Sub-section (2) of this section states: 'When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, then, notwithstanding anything contained in the other provisions of this Act, the penalty imposable under Sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.'

4. Sub-section (1) has been amended with retrospective effect in 1974; and, after the amendment, the relevant portion of Sub-section (1), so far as is material, reads as follows:

'(1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-

(a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be.....

he may direct that such person shall pay by way of penalty,-- (i) in the cases referred to in Clause (a), in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent., of the assessed tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the assessed tax....'

5. There is no change in Sub-section (2).

6. The only material change in Sub-section (1) is instead of the word 'tax' occurring in the unamended section, the expression 'assessed tax'occurs in the amended section. The argument of the learned counsel for the assessee is that the fiction created by Sub-section (2) is only for the purpose of payment of the penalty, and not for the purpose of assessing the tax, as such. In other words, according to the learned counsel, the tax payable by a registered firm has to be first assessed, and once that has been done, it is on that tax the penalty has to be calculated at two per cent. for every month of default. We are unable to accept this contention. The language of Section 271(2) is clear and definite and is not capable of such an interpretation. As per Sub-section (2) of Section 271, the tax payable by a registered firm has to be assessed as if it were an unregistered firm, and on the tax so assessed, the penalty has to be computed. As a matter of fact, the word 'amount' occurring in Sub-section (2) emphasises this construction, because, according to Sub-section (2), 'the penalty imposable under Sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an 'unregistered firm'.' The word 'amount' can be given the meaning contemplated by Section 271(2) only when the tax is assessed in the hands of the registered firm as if it were an unregistered firm, and, on that, the penalty is calculated as provided in Section 271(1). Further, Section 271(2) would be rendered nugatory if this contention were to be accepted. The very object of Section 271(2) is to treat a registered firm on a par with any other assessee, with reference to the penalty, once it commits default, notwithstanding the privilege it enjoys with regard to the quantum of tax payable by it. If the argument of learned counsel on the meaning of Section 271(2) is to be accepted, Section 271 (2) will be really otiose and superfluous, because the result contended for by the learned counsel will flow from Section 271(1) itself. In view of this clear and self-evident legal position, there is no need to refer the question for any further decision.

7. Hence, the petitions are dismissed. There will be no order as to costs.


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