Law: Income Tax Act, 1961

Section: 271

Income-tax----Penalty---Firm---Registered firm---Failure to file returns in time--­Quantum of penalty---Computation of "Assessed Tax" under S.271(l)(b)---Advance tax actually paid by firm is deductible and not advance tax payable treating firm as if it were unregistered---Indian Income Tax Act, 1961, S.271. Where a registered firm fails to furnish its returns in time, the quantum of penalty, according to subsection (2) of section 271 of the Income Tax Act, 1961, would be the same as would be imposable if the defaulting registered firm was treated as an unregistered firm. Thus, a fiction is introduced by subsection (2) for the purpose of the levy of penalty under subsection (1). The next question is what is the amount of penalty that would be payable by an unregistered firm if the registered firm is treated as an unregistered firm. Subsection (1)(i)(b) of section 271 quantifies the penalty at two per cent. of "Assessed tax" for every month of default. What then is the "assessed tax"? "Assessed tax" is defined by the Explanation itself. As per the Explanation, in arriving at the assessed tax, advance tax if any paid under Chapter XVII-C should be deducted. It is on the remaining tax, that a sum equivalent to 2 per cent. per month should be calculated at the rate applicable to an unregistered firm. In the face of the express language, the Tribunal was not right in holding that the advance tax which was not actually paid, but which was require paid registered firm should be deducted. CIT v. Palaniappa Transports (1980) 124 ITR 634 (Mad.) ref. JUDGMENT P. VENKATARAMA REDDI, J.---In these reference cases arising under the Income Tax Act, 1961, the Tribunal referred the following questions of law for the opinion of this Court: "(1) Whether the Income- tax Appellate Tribunal was correct in law in holding that. in view of the non-obstante clause found in section 271(2) of the Income Tax Act, 1961, the term `assessed tax' occurring in section 271(1)(i)(b) has to be construed de hors the Explanation thereto? (2) Whether the Tribunal was correct in law in holding that reading together the provisions of subsections (1)(i) and (2) of section 271, it is not the amount of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492