TMI Blog1975 (9) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-company on June 30, 1966 showing a reduced income of ₹ 33,392/- but the same was not entertained by the Income-tax Officer. We are not concerned with the question of the revised return in this reference. A show cause notice was issued upon the assessee to explain why penalty should not be levied. The assessee did file its written explanation to the show cause notice on December 15, 1969. The Income-tax Officer considered the various contentions raised by the assessee. He did not find any merit in the contention of the assessee that the return could not be filed for the reason that there was difficulty in settlement of accounts since the assessee maintained accounts on mercantile basis. He, therefore, imposed a penalty of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal since the net tax payable by the assessee firm was Rs. nil, there was no basis of leavy of penalty under Sec 271(1) (i). The Commissioner of Income-tax, therefore, sought this reference on the following three questions which have been referred to us for our opinion : (1) Whether on the facts and in the circumstances of the cases, the Tribunal was right in coming to the conclusion that a registered firm has to be treated as an unregistered firm only for purposes of computation of the tax on the basis of which the penalty has to be calculated under Section 271(1)(a) ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the stage of computation of tax woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be computed as provided in sub-section (2) of section 271. In other words, the tax assessed in case of the assessee-firm was ₹ 1,270/- and the assessee would not be entitled to get it reduced by the payment of ₹ 4,862/- which he made by way or self-assessed tax under Section 140-A and a demand would, therefore, clearly be issued against the assessee. In that state of affairs which has resulted on account of the amendment made in Section 271(1)(i) by the Direct Taxes (Amendment) Act, 1974, the liability is required to be computed as provided in sub-section (2) of Section 271. If that is so, it has to be found out what tax would have been payable by the assessee, if the firm had been treated as an unregistered firm and on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from the said date. The result of the amendment would be, as rightly contended by the learned advocate for the Revenue, that the assessee would not entitled to get reduction in the amount of the tax assessed by the amount of the tax provisionally paid under Section 140A in view of the Explanation to the amending section which now defines the terms assessed tax as the tax reduced by the sum deducted at source under Chapter XVII-B or paid in advance under chapter XVII-C. According to amended clause (i) of sub-section (1) of section 271, penalty is now linked up with the assessed tax and not with the net tax payable as was the position before the amendment in question as interpreted finally by the Supreme Court in C.I.T. v. Vegetable Produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the question and held against the assessee but so far as the Appellate Assistant Commissioner and the Tribunal were concerned, they proceeded on the footing that no liability was incurred since no demand could have been issued in view of the fact that there was no tax outstanding against the assessee in view of the provisional payment of tax as compared with the tax assessed. In that view of the matter, therefore, it would be necessary for the Tribunal to consider whether there was any reasonable cause which prevented the assessee from filing the return in time. Question Nos. 1 and 2 which have been raised in view of the provision of law as it stood before the amendment made in Section 271(1)(i) by the Direct Taxes (Amendment) Act, 1974 n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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