Law:

Section:

Section 254(2) of the income-tax act, 1961 Appellate tribunal Rectification of mistake Penalty, levied for late filing of returns for assessment years 1961-62 and 1962-63, reduced in appeal on basis of tax paid prior to its levy as provided in section 271(1)(a) [as it stood prior to its amendment by the direct taxes (amendment) act, 1974 with retrospective effect] Request of department to revise penalty orders rejected by tribunal because its orders, prior to amendment coming into force, were valid and it was debatable point whether amending provisions applied to assessments for which no proceedings were pending whether tribunal was justified in refusing to invoke section 254(2) Held, no Facts For the assessment years 1961-62 and 1962-63, the ITO levied penalty for late filing of returns by his orders dated 25-09-1971 and 15-03-1973, respectively. In appeal, the AAC reduced the penalty for 1961-62 to Rs. 100 and cancelled the penalty for 1962-63 on the ground that the tax paid by the assessee prior to the date of imposition of penalty had to be deducted from the assessed tax for the purpose of calculating penalty. The departmental appeals to the Tribunal were dismissed, by its orders dated 30-05-1974 and 31-05-1974, holding that no net tax was payable after giving credits of tax already paid, relying on the Judgment in the case of CIT v. Vegetable Products Ltd. [1973]88 ITR 192 (SC). Thereafter, the Direct Taxes (Amendment) Act, 1974 was enforced on 18-08-1974, amending the provisions of section 271(1)( i) with retrospective effect from the date of commencement of this Act for the purpose of calculating penalty. This amendment incorported anExplanation which defined "assessed tax" as tax, reduced by the tax deducted at source or paid in advance. The Tribunal rejected the departmental miscellaneous applications praying for rectification of their earlier dismissal orders, in view of the said amendment on the grounds that (i) at the time of passing its orders, the Amendment Act had not come into force and, as such, its order were in accordance with the then prevalent law ; (ii) it was a debatable point as to whether the amending provisions apply to a completed…

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