TMI Blog1999 (11) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of sub-ss. (1)(i) and (2) of s. 271, it is not the amount of advance tax which was actually paid by the registered firm that is material for deduction from the amount of the tax payable on the income of a registered firm treated as an unregistered firm under s. 271(2) but it is the amount of advance tax payable by such an unregistered firm which is relevant for the purpose of quantifying the amount of penalty leviable under s. 271(1)(a) in the manner provided under s. 271(1)(i)(b) of the IT Act, 1961." 2. In R.C. No. 4 of 1991, the question is couched in a different language, but, in substance, it is the same. The question is as follows : "Whether the Tribunal was correct in law in holding that reading together the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity was by way of calculating the tax notionally treating the registered firm as unregistered firm. However, in so calculating the tax for the purpose of levy of penalty under s. 271(1) of the Act, the advance tax paid by the registered firm (respondent-assessee) was given credit to. The Tribunal has taken the view that not only the advance tax actually paid by the assessee-firm, but also the advance tax payable in respect of notional tax liability of the unregistered firm should be deducted while calculating the tax. In other words, it is the view of the Tribunal that in view of the non obstante provision contained in sub-s. (1) of s. 271, the income shall be notionally treated as the income of the unregistered firm and the advance tax att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heavily from the judgment of the Madras High Court in CIT vs. Palaniappa Transports (1980) 17 CTR (Mad) 325: (1980) 124 ITR 634 (Mad) : TC 49R.807 which interpreted s. 280-O of the IT Act. 4. We are unable to endorse the view taken by the Tribunal. The Tribunal in our view read something into the crucial provisions which is not there by importing the notions underlying s. 280-O relating to annuity deposit. In fact, if we accept the contention of the Tribunal that the terms "assessed tax" occurring in s. 271(1)(i)(b) has to be construed without reference to the Explanation thereto, perhaps the assessee will be exposed to higher penalty because there will be no provision for deducting the tax at all in terms of the Explanation. We are unab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws : "271. (1) If the AO ....... in the course of any proceedings under this Act, is satisfied that any person : (a) has failed to furnish the return of total income which he was required to furnish under sub-s. (1) of s. 139 or by notice given under sub-s. (2) of s. 139 or s. 148 or has failed to furnish it within the time allowed and in the manner required by sub-s. (1) of s. 139 or by such notice, as the case may be, or ........ (i) in the cases referred to in cl. (a) ........ (b) in any other case, in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent of the assessed tax for every month during which the default continued. Explanation.---In this clause 'assessed tax' means tax as reduced by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nregistered firm should be deducted. While we agree with the Tribunal that for all practical purposes, the registered firm shall be treated as an unregistered firm for the purpose of levying the penalty, we cannot endorse the view that the advance tax liability of the unregistered firm shall be notionally calculated and given set off while arriving at the assessed tax. Apart from the fact that such interpretation files in the face of the language used in the Explanation, there is no provision, de hors the Explanation, which enables the unregistered firm to deduct the advance tax payable though not paid. 6. The decision of the Madras High Court in CIT vs. Palaniappa Transports referred to above turned on the interpretation of s. 280-O in w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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