| SooperKanoon Citation | sooperkanoon.com/798670 |
| Subject | Direct Taxation |
| Court | Chennai High Court |
| Decided On | Sep-23-1996 |
| Case Number | Tax Case No. 49 of 1982 |
| Judge | K.A. Thanikkachalam and;N.V. Balasubramanian, JJ. |
| Reported in | [1998]232ITR176(Mad) |
| Acts | Income Tax Act, 1961 - Sections 28, 212(3), 256(2) and 273 |
| Appellant | Commissioner of Income Tax |
| Respondent | K.P.V. Shaik Mohammed Rowther and Co. (P) Ltd. |
| Appellant Advocate | Deokinandan, Adv. |
| Respondent Advocate | K.M.L. Majele, Adv. |
| Cases Referred | Hindustan Steel Ltd. vs. State of Orissa
|
Excerpt:
- - state of orissa [1972]83itr26(sc) ,the supreme court held as under :an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances.thanikkachalam, j.1. in pursuance of the directions given by this court in tcp no. 229 of 1980, the tribunal referred the following question for the opinion of this court under s. 256(2) of the it act, 1961 : 'whether, on the facts and in the circumstances of the case, the appellate tribunal was right in cancelling the penalty of rs. 10,000 levied in the assessee's case under s. 273(b) for the asst. yr. 1972-73 ?' 2. the assessee m/s. k. p. v. shaik mohammed rowther (p) ltd., madras, is a company carrying on business as shipping agents. for the asst. yr. 1972-73 (previous year ended on 30th june, 1971) it filed a return admitting an income of rs. 1,54,550 on 9th february, 1973, and the assessment was finally completed on a total income of rs. 1,99,870. on 15th march, 1972, the assessee had filed an estimate of advance tax estimating the tax payable at rs. 66,625 (sic-tax) payable as per the estimate was paid on 24th may, 1972, by the assessee. as the assessee did not furnish an estimate of advance tax payable before the due date and the estimate filed on 15th march, 1972, was not a valid estimate since it was filed belatedly, the ito held that there was default on the part of the assessee under s. 212(3) of the it act. in response to the penalty notice, the assessee pleaded ignorance of law. the ito rejected the assessee's contention as untenable and levied a penalty of rs. 10,600 under s. 273(b) of the act. 3. on appeal the aac held that as the assessee filed an estimate on 15th march, 1972, though belatedly and that as the assessee had not acted deliberately in definite defiance of law and also as there was no contumacious conduct on the part of the assessee, there was no case for levy of penalty. in this view of the matter, the penalty was cancelled. 4. the department went on appeal before the tribunal. the tribunal held that inasmuch as the estimate was filed on the last date, namely, 15th march, 1972, there is no default. according to the tribunal, there are separate provisions for imposition of penalty for non-payment of advance tax and, therefore, there was no offence inviting penalty under s. 273(b) of the act in the assessee's case. the tribunal also pointed out that there was no material on record to show that the assessee deliberately acted in defiance of law. accordingly, the tribunal confirmed the order passed by the aac in cancelling the penalty levied under s. 273(b) of the act. 5. before us, learned senior standing counsel appearing for the department submitted that inasmuch as the estimate was not filed before 15th march, 1972, penalty is levied under s. 273(b) of the act. it was further submitted that ignorance of law cannot be a ground to excuse the delay in filing the estimate. according to the learned senior standing counsel, the tribunal was not correct in cancelling the penalty on the ground that the delay was technical and therefore, pardonable. on the other hand, learned counsel appearing for the assessee, while supporting the order passed by the tribunal submitted that inasmuch as the estimate was filed on 15th march, 1972, it cannot be said that the assessee has committed deliberately and wilfully delay in filing the estimate. as per the provisions under s. 212(3) of the act, the estimate should be filed before 14th march, 1972 but the estimate was filed on 15th march, 1972, and the tax was paid on 24th may, 1972. the estimate was filed a few hours later. the assessee is entitled to file the estimate before 12 o'clock on 14th march, 1972. but the estimate was filed on 15th march, 1972, when the office was opened at 10 o'clock in the morning. the assessee explained that they are not aware of the law on this aspect. technically speaking, there is not even a complete day's delay in filing the estimate. in the case of hindustan steel ltd. vs. state of orissa : [1972]83itr26(sc) , the supreme court held as under : 'an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. penalty will not also be imposed merely because it is lawful to do so. whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute'. 6. in the present case, the assessee filed an estimate on 15th march, 1972, though under s. 212(3) of the act it is stated that the estimate should be filed before 15th march, 1972, that means that the estimate should be filed before 12 o'clock of 14th march, 1972. but actually, the estimate was filed on 15th march, 1972, when the office was opened. hence, the delay is not even one complete day; but a fraction of a day. penalty cannot be levied under s. 273(b) of the act if the assessee has shown a reasonable cause for the delay. since the delay is a fraction of a day and the explanation of the assessee is that they are not aware of the provisions, applying the principles laid down by the supreme court in : [1972]83itr26(sc) , cited supra, we hold that there is no infirmity in the order passed by the tribunal in cancelling the penalty levied under s. 273(b) of the act. in that view of the matter, we answer the question referred to us in the affirmative and against the department. no costs.
Judgment:Thanikkachalam, J.
1. In pursuance of the directions given by this Court in TCP No. 229 of 1980, the Tribunal referred the following question for the opinion of this Court under s. 256(2) of the IT Act, 1961 :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the penalty of Rs. 10,000 levied in the assessee's case under s. 273(b) for the asst. yr. 1972-73 ?'
2. The assessee M/s. K. P. V. Shaik Mohammed Rowther (P) Ltd., Madras, is a company carrying on business as shipping agents. For the asst. yr. 1972-73 (previous year ended on 30th June, 1971) it filed a return admitting an income of Rs. 1,54,550 on 9th February, 1973, and the assessment was finally completed on a total income of Rs. 1,99,870. On 15th March, 1972, the assessee had filed an estimate of advance tax estimating the tax payable at Rs. 66,625 (sic-tax) payable as per the estimate was paid on 24th May, 1972, by the assessee. As the assessee did not furnish an estimate of advance tax payable before the due date and the estimate filed on 15th March, 1972, was not a valid estimate since it was filed belatedly, the ITO held that there was default on the part of the assessee under s. 212(3) of the IT Act. In response to the penalty notice, the assessee pleaded ignorance of law. The ITO rejected the assessee's contention as untenable and levied a penalty of Rs. 10,600 under s. 273(b) of the Act.
3. On appeal the AAC held that as the assessee filed an estimate on 15th March, 1972, though belatedly and that as the assessee had not acted deliberately in definite defiance of law and also as there was no contumacious conduct on the part of the assessee, there was no case for levy of penalty. In this view of the matter, the penalty was cancelled.
4. The Department went on appeal before the Tribunal. The Tribunal held that inasmuch as the estimate was filed on the last date, namely, 15th March, 1972, there is no default. According to the Tribunal, there are separate provisions for imposition of penalty for non-payment of advance tax and, therefore, there was no offence inviting penalty under s. 273(b) of the Act in the assessee's case. The Tribunal also pointed out that there was no material on record to show that the assessee deliberately acted in defiance of law. Accordingly, the Tribunal confirmed the order passed by the AAC in cancelling the penalty levied under s. 273(b) of the Act.
5. Before us, learned senior standing counsel appearing for the Department submitted that inasmuch as the estimate was not filed before 15th March, 1972, penalty is levied under s. 273(b) of the Act. It was further submitted that ignorance of law cannot be a ground to excuse the delay in filing the estimate. According to the learned senior standing counsel, the Tribunal was not correct in cancelling the penalty on the ground that the delay was technical and therefore, pardonable. On the other hand, learned counsel appearing for the assessee, while supporting the order passed by the Tribunal submitted that inasmuch as the estimate was filed on 15th March, 1972, it cannot be said that the assessee has committed deliberately and wilfully delay in filing the estimate. As per the provisions under s. 212(3) of the Act, the estimate should be filed before 14th March, 1972 but the estimate was filed on 15th March, 1972, and the tax was paid on 24th May, 1972. The estimate was filed a few hours later. The assessee is entitled to file the estimate before 12 o'clock on 14th March, 1972. But the estimate was filed on 15th March, 1972, when the office was opened at 10 o'clock in the morning. The assessee explained that they are not aware of the law on this aspect. Technically speaking, there is not even a complete day's delay in filing the estimate. In the case of Hindustan Steel Ltd. vs. State of Orissa : [1972]83ITR26(SC) , the Supreme Court held as under :
'An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute'.
6. In the present case, the assessee filed an estimate on 15th March, 1972, though under s. 212(3) of the Act it is stated that the estimate should be filed before 15th March, 1972, that means that the estimate should be filed before 12 o'clock of 14th March, 1972. But actually, the estimate was filed on 15th March, 1972, when the office was opened. Hence, the delay is not even one complete day; but a fraction of a day. Penalty cannot be levied under s. 273(b) of the Act if the assessee has shown a reasonable cause for the delay. Since the delay is a fraction of a day and the explanation of the assessee is that they are not aware of the provisions, applying the principles laid down by the Supreme Court in : [1972]83ITR26(SC) , cited supra, we hold that there is no infirmity in the order passed by the Tribunal in cancelling the penalty levied under s. 273(b) of the Act. In that view of the matter, we answer the question referred to us in the affirmative and against the Department. No costs.