Dadariya Sales and Service Vs. Commissioner of Income-tax and ors. - Court Judgment

Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - 2. section 271 of the act deals with failure to furnish returns, comply with notices, concealment of income, etc. sub-section (1) has three clauses(a), (b) and (c). clause (a) deals with failure to file returns or filing belated returns, clause (b) deals with failure to comply with the notice under certain provisions or directions under some provisions and clause (c) deals with concealment of income and furnishing of inadequate particulars of income. the case of the appellant who is admittedly guilty of filing belated returns falls under clause (a). according to sub-section (1), where the assessing officer is satisfied that the case of a person falls within any one of the clause (a), (b) or (c), he may direct that such person shall pay by way of penalty amount reckoned in accordance with the principles laid down in clause (i) or (ii) below.u.l. bhat, c.j.1. the dispute relates to imposition of penalty under section 271(1)(a) read with sections 271(1)(b) and 271(2) of the income-tax act, 1961, in relation to late filing of the returns for the years 1984-85 to 1988-89. penalty was levied while completing the assessment with due notice to the party. the deputy commissioner in appeal and the commissioner in revision declined to interfere. thereupon, the assessee filed writ petition no. 283 of 1994 seeking to challenge the imposition of penalty. it was brought to the notice of the learned single judge that there is a conflict of opinion amongst the various high courts. the learned judge felt bound by the decisions of this court which are against the assessee and, accordingly, dismissed the writ petition. hence, this appeal.2. section 271 of the act deals with failure to furnish returns, comply with notices, concealment of income, etc. sub-section (1) has three clauses(a), (b) and (c). clause (a) deals with failure to file returns or filing belated returns, clause (b) deals with failure to comply with the notice under certain provisions or directions under some provisions and clause (c) deals with concealment of income and furnishing of inadequate particulars of income. the case of the appellant who is admittedly guilty of filing belated returns falls under clause (a). according to sub-section (1), where the assessing officer is satisfied that the case of a person falls within any one of the clause (a), (b) or (c), he may direct that such person shall pay by way of penalty amount reckoned in accordance with the principles laid down in clause (i) or (ii) below. clause (i) itself is sub-divided into sub- clauses (a) and (b). admittedly, the appellant's case does not attract clause (i)(a) or clause (ii). it falls within the ambit of clause (i)(b) which reads thus :'.... he may direct that such person shall pay by way of penalty,-- (i) in the cases referred to in clause (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.' 3. the explanation reads thus :'in this clause, 'assessed tax' means tax as reduced by the sum, if any, deducted at source under chapter xviib or paid in advance under chapter xviic.'4. sub-section (2) of section 271 reads thus :'when the person liable to penalty is a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, then, notwithstanding anything contained in the other provisions of this act, the penalty imposable under sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.'5. there is no dispute that the appellant filed returns belatedly. if it was without reasonable cause, he would thereby incur liability for penalty. penalty is to be quantified in the instant case under clause (i)(b) at a sum equal to two per cent. of the 'assessed tax' for every month during which the default continues. 'assessed tax' for this purpose is tax as reduced by the sum, if any, deducted at source under chapter xviib or chapter xviic. there is no dispute that the appellant had paid advance tax for the periods in question under chapter xviic and the advance tax so paid was more than the tax ultimately assessed in each of the years. going bythe artificial definition of the words 'assessed tax' given in the explanation, penalty leviable on the appellant would be zero since tax reduced by the sum paid as advance was a minus amount. advance tax was paid and tax was calculated in the assessment order on the basis that the appellant is a registered firm. the tax rate applicable to a registered firm is substantially lower than that applicable to an unregistered firm. according to sub-section (2) of section 271, when a person 'liable to penalty' is a registered firm, the penalty imposable under sub-section (1) shall be the same as would be imposable on that firm if it were an unregistered firm. therefore, for the purpose of quantification of the penalty, in the instant case, the tax imposable should be calculated not at the rate applicable to a registered firm but at the higher rate applicable to an unregistered firm. there no dispute that the advance tax paid was less than the tax payable if the appellant is treated as an unregistered firm. in other words, advance tax paid would more than cover the tax payable as a registered firm but would fall short of the tax payable as an unregistered firm. if tax is reckoned treating the petitioner as an unregistered firm, applying the artificial definition of 'assessed tax' in the explanation referred to above, some amount would be due as assessed tax and two per cent. of that amount would be the quantum of penalty. it was on this basis that the assessing officer and the appellate and revisional authority looked at the matter.6. learned counsel for the appellant contends that this is not the correct way of understanding and interpreting the statutory provisions, that sub-section (1) should be first invoked and applied and only if there is some amount of assessed tax found, can sub-section (2) be invoked and in this case, since the appellant is a registered firm, and the advance tax paid is more than the tax payable as a registered firm, there was no 'assessed tax' and no penalty was leviable and in such a case sub-section (2) would not apply.7. this court has consistently taken the view against the view propounded by the appellant. (see : delux publishing co. v. addl cit : [1981]127itr782(mp) ; cit v. bhabuti contractor : [1990]183itr445(mp) and kaluram ladharam v. cit : [1990]184itr294(mp) . in the first of these decisions, the advance tax was less than the tax due and there was a demand. the facts of the last of the cases are not clear. in bhabuti contractor's case : [1990]183itr445(mp) advance tax paid was more than the tax due under the act and there could be no demand and there was a refund as in the case at hand. on the question involved in this case, the high courts of andhra pradesh, rajasthan, madras, gauhati, punjab and haryana, orissa and calcutta have taken a view in favour of theassessee. in bhabuti contractor's case : [1990]183itr445(mp) , this court considered the view taken by these high courts except the high courts of punjab and haryana and orissa and declined to follow the view taken by the said courts and followed the consistent view taken by this court. the judgment is an elaborate one and considers most of the decisions on the point. learned counsel for the appellant has invited our attention to the decisions of the high court of punjab and haryana in cit v. harish chand and co. and of the high court of orissa in cit v. premilla singh and co. : [1994]207itr887(orissa) which support him. the reasonings in these judgments is more or less similar to that in the judgments considered in bhabuti contractor's case : [1990]183itr445(mp) . we may also refer to a decision of the gujarat high court in cit v. r. ochhavlal and co. : [1976]105itr518(guj) , where the assessee, a registered firm, was not liable to pay tax since the assessable income was less than the exemption limits, but penalty was levied for belated filing of the return and that was sustained by the high court.8. the question which arises for consideration is whether the view taken by this court in the earlier decisions requires reconsideration. having carefully considered the various decisions, we are of the opinion that the learned single judge was justified in following the earlier view of this court. learned counsel for the appellant placed reliance on the decision of the supreme court in ganesh dass sreeram v. ito : [1988]169itr221(sc) . that is a case not on levy of penalty under section 271 but levy of interest under section 139 of the act for belated submission of return. the decision shows that the assessee had paid advance tax. the advance tax paid by the assessee was more than the tax due and there was no demand but refund. it was contended by the assessee that under these circumstances interest could not be levied. the revenue contended that interest was levied by way of penalty and, therefore, it could be validly levied. the supreme court observed (at page 227) :'this contention need not detain us long, for it has already been decided by this court in central provinces manganese ore co. ltd. v. cit : [1986]160itr961(sc) , that interest is levied by way of compensation and not by way of penalty. in chandra sekhar's case : [1985]151itr433(sc) , this court also has taken a similar view. the high court, however, has taken the view that the interest charged partakes also of a penal character. in expressing that view, the high court has placed reliance upon a decision of this court in jain brothers v. union of india : [1970]77itr107(sc) . in that case, this court was mainly considering a challenge to section 271(2) of the act, which is a penal provision, on the ground of contravention ofarticle 14 of the constitution. the question whether charging of interest under the proviso to section 139(1) of the act was in the nature of penalty or not, was not considered by this court. indeed, the subject-matter was different from that with which we are concerned. in view of the decisions of this court in chandra sekhar's case : [1985]151itr433(sc) and in the case of central provinces manganese ore co. ltd. : [1986]160itr961(sc) , we hold that the charging of interest did not become transformed into penalty.'9. since interest was leviable by way of compensation, the assessee had paid full advance tax which covered the tax due, and the state did not suffer any loss, obviously interest could not be charged. this principle will not apply to imposition of penalty.10. learned counsel relied on the decision in cit v. deepak trading co. : [1994]208itr304(cal) , which refers to a circular issued by the central board of direct taxes at page 309. the board issued a circular instructing the assessing officer that section 271(1)(a) should not be invoked in the case of a registered firm unless its income exceeds the maximum amount not chargeable to tax by rs. 1,500. since the imposition of penalty is on account of some action or inaction on the part of the assessee, the board decided to take a lenient view in the case of borderline cases. the circular cannot be of any assistance to the appellant.11. for the reasons indicated above, we follow the view taken in the decisions of this court, sustain the impugned decision of the learned single judge and dismiss the appeal. no costs.