TMI Blog2002 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... monetary limit in respect of penalty under section 272A(2)(c) prescribed with effect from October 1, 1991, was applicable to defaults committed earlier as well? - 5. Whether the Tribunal was right in law in holding that proviso to section 272A(2)(c) was a procedural provision and, therefore, applied to all pending matters?" - As regards questions Nos. 1 and 2, we are of the view that the Income-tax Appellate Tribunal was justified in cancelling the penalty imposed under section 272A(2) - As regards question No. 3, we are unable to agree with the reasonings given by the Income-tax Appellate Tribunal - The questions Nos. 4 and 5 do not survive - - - - - Dated:- 11-5-2002 - Judge(s) : N. N. MATHUR., D. N. JOSHI. JUDGMENT The judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He is also responsible under section 206 of the Act of 1961, for deducting tax at source under Chapter XVII and prepare, deliver or cause to be delivered to the prescribed income-tax authority within the prescribed time after the end of each financial year, a return of the tax deducted in the prescribed Form No. 24. Though the respondent duly deducted the tax at source before making the payment of salaries to his employees and also deposited the same with the State exchequer in time, yet he failed to file the return of such deductions made in 1987-88 and 1988-89 within the prescribed time. The only explanation given for the delay is ignorance of the relevant provisions of the Income-tax Act. In the opinion of the Deputy Commissioner, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, under section 192 of the Act of 1961, he was under the statutory obligation to deduct tax before disbursing salaries to the employees. Being aware of that, the respondent discharged the obligation by deducting the tax at source. Another part relating to his statutory obligation was to file return of such deductions within the prescribed time before the prescribed authority as required by section 206 of the Act of 1961. Admittedly, the respondent failed to discharge the obligation under section 206 of the Act. Section 272A(2)(c) provides levy of penalty in case of such default. It would be convenient to read section 272A(2)(c), which is extracted as follows: "272A. (2) If any person fails-... (c) to furnish in due time any of the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression "tax deductible or collectibles. Thus, in case no amount is "deductible" or "collectible" no penalty under section 272A(2)(c) can be levied. The view of the Tribunal is extracted as follows: "The former expression refers to an incomplete act or an act yet to be done, the latter to a completed act or act already done. The amount of tax already 'deducted' or 'collected' should normally not attract levy of penalty. But the amount of tax which remains to be deducted or collected may also attract levy of penalty. In its wisdom, the Legislature has thought it proper to use the terms 'deductible' or 'collectible' and not the terms 'deducted' and 'collected' in the language of the proviso to section 272A(2) of the Act. The penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot inflict penalty in a thoughtless or routine manner. The Legislature may create an offence of a strict liability where mens rea is wholly or partly not necessary. The question whether the offence involves the existence of mens rea as an essential element of it or whether the statute dispenses with it and creates strict liability, are questions which have to be answered on a true construction of the statute. The apex court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 has observed that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of inadvertent office mistake, it would not be a sound exercise of judicial or quasi-judicial power to inflict a penalty on the head of the public office. In such cases, the tax authorities should also evolve a method of advising the head of the office by way of notice or reminder providing an opportunity to comply with the provisions, the breach of which may lead to levy of penalty. If the head of the office does not act even after such a notice, it will be open for the tax authorities to say that it was not a case of inadvertent mistake. In view of the aforesaid, we answer the questions posed by the Tribunal as follows: (i) As regards questions Nos. 1 and 2, we are of the view that the Income-tax Appellate Tribunal was justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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