TMI Blog1989 (3) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income on or before July 31, 1978. It did not, however, file any such return till April 7, 1982. Penalty proceedings were consequently initiated against it under section 27 of the Act. In dealing with this matter, it was found that the tax payable by the assessee was Rs. 2,550 whereas the tax deducted at source was Rs. 4,050. This being so, no tax was assessed as payable when the assessment was framed. The Income-tax Officer, however, proceeded to assess and impose a penalty of Rs. 7,660 treating the assessee as an unregistered firm for the purpose of calculation of this penalty. This penalty was, however, deleted in appeal by the Appellate Assistant Commissioner, whose order was later upheld by the Tribunal. Two questions of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the forefront of the contrary opinion is the judgment of the High Court of Rajasthan in CIT v. Builders Engineers Co. [1989] 175 ITR 317, where it was held that if the entire amount of tax has already been paid, being deducted at source or paid in advance, the question of imposing any penalty on the "assessed tax" does not arise because no tax is actually due. It was explained in this behalf that the penalty which can be imposed is " sum equal to 2% of the assessed tax for every month during which the default continued". The expression "assessed tax" in this context means "tax as reduced by the sum, if any, deducted at source, under Chapter XVII-B or paid in advance under Chapter XVII-C". Thus, where no amount of tax remains to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preference to that of the High Court of Gujarat in R. Ochhavlal and Co.'s case [1976] 105 ITR 518. It deserves note here that this view of the High Court of Gujarat and the other courts, where a similar view has been taken, was expressed before the judgment of the Supreme Court in Ganesh Dass Sreeram's case [1988] 169 ITR 221. The reasoning as given by the Supreme Court there is clearly applicable to the issue raised and, therefore, it must be held that no penalty is payable where the tax deducted at source, and/or paid in advance is equal to or exceeds the assessed tax payable by a registered firm. Both the questions are consequently answered in the affirmative, in favour of the assessee and against the Revenue. This reference is disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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