9911796707
TMI Blog1986 (4) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to the above notice the assessee did not file any return of income. Assessment, as such, was framed exparte, under section 144/147(a) of the Act on 20-3-1980 and total income was determined at Rs. 8,40,097. Since the assessee had failed to file the return of income in compliance to notice issued and served on the assessee under section 148 of the Act, penalty provisions were taken against the assessee under section 271(1)(a) of the Act and for the said purpose a notice under section 271/274 of the Act was issued on 20th March, 1980. This notice also remained uncomplied with, however, the assessee was given another opportunity vide letter dated 13-1-1982, fixing the hearing for 20-1-1982. This also remained uncomplied with but on 25-1-1982 a letter was received from the assessee bearing the date 24-1-1982, wherein adjournment was prayed for up to 2-2-1982. Assessee's request was allowed. Further request by the assessee for adjournment was also allowed and the penalty proceedings were finally fixed for final hearing for 16-3-1982. On 16-3-1982 Shri K. S. Walia representing the assessee put in an appearance, but could not offer any reasonable explanation for the default. Penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation to offer, much less, any reasonable cause for the default of failure to file the return. The default of the assessee was held to be patent one and levy of penalty justified, but here we like to clarify that the learned Commissioner of Income-tax (Appeals) heard the appeal exparte, of course, on merits. The assessee as yet being aggrieved, is in appeal and we have heard the parties at length. 2. Before us the substantive ground taken by the assessee, reads as under : 1. "That the ex parte order as passed by the learned CIT (Appeals) against the appellant firm is bad in law and facts of the case. " The assessee has also raised grounds 2 to 10, but all these narrate the facts about the assessee having not been allowed inspection of records by the Income-tax Officer. It also speaks of the action of the learned Commissioner of Income-tax (Appeals) in not granting the assessee an adjournment and hearing the appeal ex parte. Before the learned Commissioner of Income-tax (Appeals) also the assessee has taken only one ground, reading as under : "The Inspecting Commissioner of Income-tax has erred in law and facts of the case in imposing a penalty of Rs. 2,08,100 on your petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the law. 2. That assuming (though not admitting) that the service of Sec. 148 notice was proper, even then the imposition of this penalty (For the second time) is illegal because the appellant believes that similar penalty proceedings were initiated on the basis of the original assessment order u/s 143(3) on 29-3-1974. 3. That in any event the method adopted in the impugned order dated 16-3-1982 is not as warranted by law because the quantum penalty imposable for the alleged default could at best be related to the URF Tax due on Rs. 50,000 by calculating the difference of URF tax that works out on Rs. 8,40,097 and on Rs. 7,90,097. 4. That plain literal interpretation adopted by the ITO while applying the provisions of Sec. 271(1)(i)(b) read with Explanation thereto and read with sub-section (2) of Section 271 of IT Act, 1961 leads to manifestly absurd and unjust results which could never have been intended by the Legislature, hence the department should have given a more reasonable and rational construction to the above provisions and thereby restrict the imposition of penalty only to the extent of URF tax due on Rs. 50,000 as submitted in ground No. 3 above, Reliance K. P. V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on a disclosure made by the assessee voluntarily, the issue was a controversial one and capable of two interpretations, hence in view of the decision of the Hon'ble Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192, a view favourable to the assessee was warranted. Concludingly, Shri Tiku, the learned counsel for the assessee, made a forceful plea for no penalty. 7. On his part, the learned senior Departmental Representative relied upon the orders of the learned lower authorities as also photostat copies of documents placed on our file viz., assessee's letter dated March 13, 1980 and IAC's letter to the assessee dated 25th March, 1980 along with copy of notice under section 148 of the Act. He also contended that once already completed assessment is re-opened, parties revert back to their original position and the reassessment is to be taken at par with an assessment and all consequence flowing out of an assessment must follow, hence the justification for the levy of penalty since the assessee had not complied with the notice served on the assessee under section 148 of the Act. 8. The contention of the learned counsel for the assessee as to non-levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of tax on an unregistered firm, even though the firm has paid advance tax and it is entire tax liability as a registered firm has been fully discharged by the payment of advance tax'. As regards the second limb, once originally completed assessment was re-opened, the parties revert back to their original position, and the presently made assessment under section 144/147 (a) of the Act has to be held and equated with an assessment in view of section 2(8) of the Act which defines, 'assessment includes re-assessment'. All consequences flowing out of this assessment dated 20th March, 1980 must follow and on the facts and in the circumstances of the present case, qua the issue involved in this appeal, penalty is exigible under section 271(1)(a) of the Act from the date of the service of the notice under section 148 of the Act to the date of the assessment, viz., 20th March, 1980 and the basis is to be the total assessed income and not the income subject-matter of escapement. 12. As per assessment order dated 20th March, 1980 the total income assessed and being charged to Income-tax is Rs. 8,40,097 (rounded off to Rs. 8,40,100) and this is to the basis and the penalty is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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