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C.I.T. versus M/S J.M.J.C.COM.

High Court of Judicature at Allahabad

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C.I.T. v. M/S J.M.J.C.Com. - INCOME TAX REFERENCE No. 116 of 1990 [2006] RD-AH 13164 (8 August 2006)


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Court No.37

Income Tax Reference No.116 of 1990

Commissioner of Income Tax, Allahabad vs. M/s. Jai Man Jagdamba Construction Co. Chopan, Mirzapur.

Hon'ble R.K.Agrawal, J.

Hon'ble Vikram Nath, J.

(Delivered by R.K.Agrawal, J.)

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as "the Act" for opinion to this Court:

"Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that no penalty was payable by the assessee firm for late submission of the return of income for the assessment year 1980-81?"

The present Reference relates to the Assessment Year 1980-81.

Briefly stated the facts giving rise to the present Reference are as follows:

The assessee is a firm which has been granted registration in terms of Section 185 of the Act in respect of the Assessment Year 1980-81. Its return of income should have been filed in terms of Section 139(1) of the Act on or before 31.7.1980. The same was, however, filed by the assessee on 31st of March, 1983. The total income of the firm was determined by the Income Tax Officer at Rs.72,330/- vide his order dated 26th of March, 1984. The tax payable thereon was determined to be Rs.7,020/-.

The tax deducted at source was Rs.11,615/-. The firm was, therefore, granted refund representing the difference between the assessed tax and the tax deducted at source. As the return filed was abnormally late, a notice under Section 271(1)(a) was issued by the Income Tax Officer to the assessee. As no reply was received by the Income Tax Officer from the assessee, he imposed penalty on the assessee amounting to Rs.10,895/- treating the firm as unregistered firm for the purpose of determining the tax payable by the assessee.

The assesee appealed against the aforesaid order to the A.A.C. and pleaded before him, inter alia, that the delay was caused because of late receipt of tax deduction certificates. The learned A.A.C. Rejected the assessee's explanation by pointing out that the tax deduction certificates had been issued to the assessee in July, 1980 and, therefore, there was no reasonable cause for filing the return as late as 31.3.1983.

The assessee appealed against the aforesaid order to the Tribunal and pleaded before it that inasmuch as the assessed tax payable by the assessee as registered firm as per the assessment order and the demand notice issued along with it was Nil(in fact there was a refund), the penalty on the assessee could not have  been imposed, for assessed tax being Nil, penalty was nil. On behalf of the Revenue, the order of the A.A.C was supported. The Tribunal accepted the above submission of the assessee and drew support from the following decisions:

1.Gandesh Dass Sreeram v. I.T.O. (169 I.T.R.221 SC

2.C.I.T. v. Buildiners Egnineers Co. 175 I.T.r. 317.

          We have heard Sri Shambhoo Chopra, learned Standing Counsel appearing for the Revenue. Nobody has appeared on behalf of the respondent-assessee.

        We find that this Court in the case of Commissioner of Income Tax, Lucknow v. Chanda Radio, Lucknow, 2005 U.P.T.C.1141, has followed its earlier decision in the case of Ram Bilas Purshottam Das v. Commissioner of Income Tax, 201 I.T.R.11 wherein it has been held as follows:

"The legal position is that the penalty exigible for delay or default in furnishing the return of income shall be two per cent for every month during which the default continued and the quantum of penalty is to be calculated with reference to the "assessed tax" i.e. tax payable on total income, as reduced by the sum, if any, deducted at source or paid as advance tax. However, if the defaulter is a registered firm, for the purpose of imposition of penalty, the firm is to be treated as an unregistered firm and, so treated, the "assessed tax" must be calculated on the basis that it was an unregistered firm"

The question referred therein was answered in favour of the Revenue and against the assessee.

Respectfully following the aforesaid decision, we answer the question referred to us in the negative i.e. in favour of the Revenue and against the assessee.

There shall be no order as to costs.




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