Commissioner of Income Tax vs Braham Prakash and Co.

S.S. Sodhi, J.—The two questions of law referred for the opinion of this court read as under :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in affirming the order of the Appellate Assistant Commissioner of Income Tax cancelling the penalty of Rs. 8,176 levied by the Income Tax Officer u/s 271(1)(a) ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that penalty u/s 271(1)(a) was leviable only if the assessee-firm had not discharged its tax liability as a registered firm ?"

The return of income which should have been filed on or before July 31, 1976, was not filed by the assessee, a registered firm till December 7, 1977. It was, however, found that the tax deducted at source was in excess of the amount due from the assessee. The assessee was, therefore, entitled to refund of tax.

The Income Tax Officer, however, imposed a penalty of Rs. 3,179 which was later set aside by the Appellate Assistant Commissioner on appeal. The Tribunal too decided in favour of the assessee. This is the factual background leading to this matter being referred to this court,

A similar question arose in Income Tax Reference No. 97 of 1986 ( Commissioner of Income Tax Vs. Harish Chand and Co., , decided on March 14, 1989, 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 imposition of any penalty upon a registered firm u/s 271(1)(a)(i)(b) of the Income Tax Act, 1961, does not arise. Both the questions are accordingly hereby answered in the affirmative, in favour of the assessee and against the Revenue.

This reference is disposed of accordingly. There will, however, be no order as to costs.