Law:

Section:

Section 271(1)(a) , read with section 297, of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1960-61 - Assessee filed late return of income for relevant assessment year but before coming into force of 1961 Act - ITO completed assessment after 1961 Act came into force and imposed minimum penalty of 2 percent by virtue of provisions of section 297(2)(g) - On appeal, Tribunal held that quantum of punishment could not exceed that which was prescribed under law at time of commission of offence and consequently, reduced penalty from 2 percent to Rs. 1000 - Whether imposition of penalty had to be according to provisions of section 271(1)(a) which provides minimum of 2 percent in case of delayed filing of return - Held, yes - Whether, therefore, Tribunal was not competent to reduce penalty below minimum prescribed under section 271(1)(a) - Held, yes FACTS The assessee filed a return in respect of the assessment year 1960-61 on 2-8-1961. The Income-tax Officer completed the assessment on 13-3-1962, subsequently, he reopen the assessment and a fresh assessment was made after the Income-tax Act, 1961, had come into force and proceedings for imposition of penalty under section 271(1)(a) were started against the assessee for filing the return late. The ITO did not accept the explanation given by the assessee and imposed a minimum penalty of 2 percent by virtue of the provisions of section 297(2)(g). On second appeal to the Tribunal, it was argued that section 297(2)(g) merely made the procedure of the 1961 Act applicable, but the quantum of penalty could be imposed under the Act of 1922 and, consequently, there was no minimum which was to be imposed in such cases. The Tribunal, relying upon a decision of the Supreme Court in a criminal matter in Rao Shiv Bahadur Singh v. State of V.P. AIR 1953 SC 394, held that the quantum of punishment could not exceed that which was prescribed under the law at the time of the commission of the offence and, consequently, reduced the penalty from 2 percent to Rs. 1,000 in a lump sum. On reference : HELD The Tribunal made a mistake in applying the principle of criminal law. Following the decision of the…

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