TMI Blog2001 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... as clearly held that when a registered firm commits a default, the provisions of section 271(2) of the Income-tax Act, 1961, would come into play? - (iv) Whether, on the facts and circumstances of the case, justified deletion of the penalty imposed by the Income-tax Officer under section 271(1)(a) of the Income-tax Act, 1961?" - Questions Nos. 1 and 4 are, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. - - - - - Dated:- 18-9-2001 - Judge(s) : M. S. SHAH., D. A. MEHTA. JUDGMENT The judgment of the court was delivered by D.A. MEHTA J.-In compliance with the directions issued by this court under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the appeals. The reasons which weighed with the Appellate Assistant Commissioner were firstly, that the Income-tax Officer had not waited for the reply from the assessee because admittedly at least for the first two years, the notices calling for replies had been received by the assessee on the date on which the penalty orders had been framed. Secondly, the assessee had applied for extension of time and the said period had not been taken into consideration while computing the period of default. Thirdly, as the entire tax had been paid by way of tax deducted at source from contract payments, the assessee became entitled to refunds for all the years and this fact was verifiable from the assessment orders. In view of these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tay of the Department's case was that in the light of considerable delay in filing the return, it was open to the Revenue to assume the default and further infer that the assessee had failed to discharge its statutory obligation--this approach was not approved by the Tribunal. The reasons which weighed with the Tribunal were that the assessee as a registered firm was entitled to refund, and by delaying the filing of the return, the assessee had caused prejudice to its own cause rather than the interest of the Revenue. In so far as the second part of the Tribunal's order is concerned, it refers to a decision in the case of CIT v. R. Ochhavlal and Co. [1976] 105 ITR 518 (Guj) as well as the decision of the Gauhati High Court in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. Questions Nos. 1 and 4 are, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Our attention was drawn by Mr. Naik to the following two decisions of this court: (i) CIT v. Damjibhai and Brothers [1976] CTR 23 (Guj); and (ii) CIT v. Jashbhai Motibhai and Co. (I.T.R. No. 205 of 1975 decided on February 26, 1979). In light of the ratio of the aforesaid two decisions, we hold that the Tribunal was not justified in holding that merely because on completion of assessment of the assessee in the status of a registered firm a refund was due to the assessee no penalty was leviable. Questions Nos. 2 and 3 are, therefore, answered in the negative, i.e., in favour of the Revenue and agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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