Commissioner of Income-tax Vs. Prithipal Singh and Co. - Court Judgment

Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a tenuous plea that even though he knew about the order, he was waiting for its formal communication to seek redress against the same in appeal. if a party does not know about the making of the order either actually or constructively it may claim that the period of limitation would start running from the date it acquires knowledge of the making of an order but one cannot understand how a party, who has acquired knowledge of the making an order either directly or constructively can ignore the same and belatedly seek redress just because the authority making the order had made a default in formally communicating the order to him. allowing a party to do so would amount to placing a premium on the lack of diligence of a party, who is remiss in seeking a remedy that was available to it. therefore, knowledge whether actual or construction of the order passed by the state or regional transport authority should result in commencement of the period of limitation. thus,. in cases where the state or regional transport authority has not communicated the order of refusal passed to the persons concerned, the period of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - clause (iii) deals with cases referred to in clause (c) under sub-section (1) of section 271 of the act and it clearly provides therein that the penalty or further sum payable by a person would be in addition to any tax payable by him. 4. income' has been defined in section 2(24) of the act which clearly includes profits, gains, dividends or other benefits derived only, loss cannot possibly be termed as income.k.s. bhalla, j.1. at the instance of the revenue, the income-tax appellate tribunal, amritsar, has referred the following two questions for the opinion of this court with regard to the assessment year 1970-71 concerning prithipal singh and co., ludhiana :'(1) whether, on the facts and in the circumstances of the case, the appellate tribunal is right in law in holding : (a) that the provisions of the explanation to section 271(1)(c) will not be attracted to the present case ? (b) that the word 'income' occurring in clauses (c) and (iii) of section 271(1) refers to a positive income only and not to a loss ? (2) whether, on the facts and in the circumstances of the case, the appellate tribunal is right in law in cancelling the penalty order passed by the inspecting assistant commissioner by holding that no penalty could be levied against the assessee ?' 2. the assessee, which was a firm existing in the assessment year 1970-71, filed its return for the said assessment year on september 30, 1970, declaring loss of rs. 3,35,830, the income-tax officer, vide his order, annexure 'a', found that it was a case of concealment and suppression of income as the assessee had furnished inaccurate particulars of its income. he computed the assessee's income at rs. 1,47,978 and, in the course of the assessment proceedings, started penalty proceedings under section 271(1)(c) of the income-tax act, 1961 (hereinafter called 'the act'), for the reason that the assessee had grossly understated its income. the assessee went in appeal to the appellate assistant commissioner against the order of the income-tax officer and the appellate assistant commissioner determined the loss at rs. 34,164 against the returned loss of rs. 3,35,830, vide his order dated november 30, 1973, annexure 'b'. the penalty proceedings initiated by the income-tax officer were referred to the inspecting assistant commissioner (central), ludhiana, under section 274(2) of the act and, vide his order, annexure 'c', he imposed a penalty of rs. 3,50,000 for concealment under section 271(1)(c) of the act for that assessment year. the assessee went in appeal to the income-tax appellate tribunal against the imposition ofpenalty by the inspecting assistant commissioner which was allowed, vide its order dated august 22, 1978, annexure 'd', holding that no penalty could be imposed upon the assessee when it had returned a loss and it had also been assessed finally on a loss figure. thereafter, the commissioner of income-tax (central), ludhiana, moved an application before the income-tax appellate tribunal, amritsar, which resulted in the present reference.3. penalty imposed is paid in addition to the tax payable. when there is no tax payable, the question of any penalty does not arise. in fact, evasion of tax is the sine qua non for imposition of penalty. clause (iii) deals with cases referred to in clause (c) under sub-section (1) of section 271 of the act and it clearly provides therein that the penalty or further sum payable by a person would be in addition to any tax payable by him. explanations 3 and 4 annexed to the said provision of law also presuppose taxable income with regard to the assessment year in question. if there is no taxable income or tax assessed for payment during a particular year, the question of evasion and consequently penalty do not arise. as is obvious from annexure 'b', the assessee was assessed finally at a loss figure amounting to rs. 34,164 as pointed out at page 33 of the record. thus, there was no income and so the motive to avoid tax during the year in question is completely missing. may be, it may give a benefit to the assessee in the coming year as the loss could be carried forward but, by no stretch of imagination, can it be said that, during the assessment year in question, the assessee had concealed its income.4. 'income' has been defined in section 2(24) of the act which clearly includes profits, gains, dividends or other benefits derived only, loss cannot possibly be termed as income. under section 139(1) of the act, a person is required to furnish a return only if his total income during the previous year exceeded the maximum amount which is not chargeable to income-tax. if the same falls short of the maximum amount which is not chargeable, which has been the case here as per final assessment, he need not file a return. a person who sustains a loss, however, may file a return in view of sub-section (3) of section 139 of the act if he wants to claim that the loss or any part thereof should be carried forward. the penal provisions of section 271(1)(c), therefore, are attracted only in the case of an assessee having positive income and not loss, as the question of concealment of income to avoid payment of tax would arise only in the former case. penalty is a deterrent measure to prevent evasion of tax and when there was no tax payable, there could not be any such evasion so as to provide a scope for levying any penalty. in the present case, only the loss has been reduced and it cannot be said that the assessee had suppressed any income which would have attracted liability to tax. the question of imposition of penalty, therefore, did not arise. thus, on the facts and in the circumstances of the case, the appellate tribunal has acted rightly in law in holding that the provisions of the explanation to section 271(1)(c) will not be attracted to the present case. the word 'income' occurring in clause (c) and (iii) of section 271(1) of the act refers to positive income only and that no penalty could be levied against the assessee.5. for the foregoing reasons, all the questions are answered in the affirmative, i.e., in favour of the assessee and against the revenue. none having put in appearance on behalf of the assessee, no order for costs is made.