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1979 (11) TMI 30 - HC - Income Tax

Issues:
1. Reduction of penalty imposed under section 271(1)(a) of the Income Tax Act, 1961.
2. Applicability of penalty rates under different sections based on the time of default.

Analysis:
The case involved a reference by the Commissioner of Income-tax regarding the reduction of a penalty imposed on the assessee for a delay in filing the return for the assessment year 1958-59. The assessee filed the return after a significant delay, resulting in a demand of Rs. 15,739. The Income Tax Officer (ITO) imposed a penalty of Rs. 7,869 under section 271(1)(a) of the Income Tax Act, 1961, which was confirmed by the Appellate Assistant Commissioner (AAC).

Upon further appeal, the Tribunal agreed with the ITO and AAC regarding the unsatisfactory explanation for the delay but considered the penalty amount should be determined based on the provisions of the Indian Income Tax Act, 1922, under which the default occurred. The Tribunal reduced the penalty to Rs. 1,000 and directed a refund of the excess amount to the assessee.

The High Court, however, held that the penalty should be imposed under section 271(1)(a) of the 1961 Act, as decided by the Supreme Court in the case of Jain Brothers. The Court emphasized that the penalty amount cannot be reduced below the rates prescribed by the section, even if the default occurred under the earlier Act. The Court referred to previous decisions and clarified that the applicability of penalty provisions should be based on the date of infringement, not the date of penalty imposition.

The Court rejected the argument that the penalty should be reduced based on the period of default, as it was already settled by previous decisions that section 271(1)(a) applies in such cases. The Court concluded that the Tribunal was not justified in reducing the penalty and ruled in favor of the Commissioner of Income-tax. No costs were awarded in the case.

 

 

 

 

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