Law:

Section:

Section 271(1)(a) of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment years 1958-59 and 1959-60 - Assessee moved application for settlement of his tax liabilities as also waiver of penalties under sections 271(1)(a) and 271(1)(c) - Commissioner directed levy of minimum penalty under section 271(1)(c) - Subsequently, ITO levied penalty under section 271(1)(a) - Whether in view of fact that when assessee moved Commissioner for settlement, ITO had already initiated proceedings under section 271(1)(a), therefore, on Commissioner's direction for levy of minimum penalty under section 271(1)(c), it must be assumed that Commissioner had waived penalties under both provisions i.e. section 271(1)(c) as well as section 271(1)(a) - Held, yes - Whether, consequently, ITO was not justified in levying penalty under section 271(1)(a), subsequent to settlement arrived at between parties - Held, yes FACTS For the assessment years 1958-59 and 1959-60, the ITO completed the assessments and initiated penalty proceedings under section 271(1)(a) and 271(1)(c). On an application filed in April 1967, for settlement of his tax liability for various years and also for waiver of penalty, the Commissioner directed, inter alia, levy of minimum penalty under section 271(1)(c). Thereafter, the ITO levied penalty under section 271(1)(a) for the assessment years 1958-59 and 1959-60. On second appeal, the Tribunal held that no penalty would be levied for belated submission of a return after settlement and the assessee should be given the benefit of doubt. The silence of the Commissioner about the levy of penalty under section 271(1)(a) should be considered in favour of the assessee, particularly in view of the express mention of one kind of penalty and silence about the other. On reference : HELD When the assessee moved the Commissioner for settlement, the ITO had already initiated the proceedings under section 271(1)(a) and (c). Therefore, the matter, when it went to the Commissioner, was with regard to both the penalties and the Commissioner only passed an order with regard to the penalty under section 271(1)(c) and did not pass any order with regard to the penalty…

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