TMI Blog1980 (1) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 154 and the penalty should be upheld, if at all, on the basis of the revised order ? " The facts necessary for answering this question are these : The assessee was assessed for the assessment year 1965-66 on 24th September, 1968, on an income of Rs. 31,845, the returned income being Rs. 26,130. As a result of this order, an amount of Rs. 1,024 became due to the assessee and the assessee was informed of this by notice under s. 156. It appears that there had been delay on the part of the assessee in filing his return and a notice under s. 271(1)(a) was also issued directing the assessee to file a reply by the 19th October, 1968. The assessee took time to file his reply which was submitted by him on 19th June, 1970. In the reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the order of penalty on the ground that before the order could be passed a fresh opportunity should have been given to the assessee, inasmuch as a penalty had been imposed on the basis of the rectified assessment order and not on the basis of the original assessment order. The Tribunal did not agree with this. It held that, as the assessee had agreed to the rectification of the assessment order a few days before the penalty was imposed, it was not necessary for the ITO to have issued a fresh notice after the assessment was rectified. However, in view of the fact that the delay in filing the return for the period during which the firm had not filed its return, provided a reasonable cause for not filing the return, the Tribunal directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department. Thus, the only controversy is that which we have indicated earlier. A penalty under s. 271(1)(a) can be imposed for delay in the filing of returns unless the assessee shows reasonable cause for the delay. The quantum of penalty as set out in s. 271(1)(a), as it stood in the relevant year, was 2% of the tax for every month during which the default continued, but not exceeding 15% of the tax. Thus, if no tax was payable by the assessee no penalty was exigible for late filing of the return. This being so, as the notice under s. 271(1)(a) had been issued on the basis of the original assessment order, the assessee rightly contended in his reply that the penalty proceedings should be dropped as he had become entitled to a refund by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal's view that the assessee knew that the penalty was going to be imposed on the basis of the rectified assessment when the notice under s. 271(1)(a) had been issued much earlier on the basis of the original assessment order. It is also worth taking note of the fact that the reply submitted by the assessee to the notice under s. 271(1)(a) was an effective reply, and as the matter stood before the rectification order, no penalty was exigible on the assessee. This being so, as the penalty order was passed on the basis of the rectified assessment order, i.e., in changed circumstances, a fresh notice had to be issued before the penalty could be founded on the rectified order. We accordingly answer the question in the negative, in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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