COMMISSIONER OF INCOME-TAX VS RATANCHAND MEHTA
1997PTD 1516
[221 ITR 16]
[Madhya Pradesh High Court (India)]
Before A. K. Mathur, C. J. and S. K. Kulshreshtha, J
COMMISSIONER OF INCOME-TAX
Versus
RATANCHAND MEHTA
Miscellaneous Civil Case No. 126 of 1988, decided on 07/02/1996.
Income-tax---
----Penalty---Returns filed beyond period prescribed---Notice under S.148 issued but no return filed in response to said notice---Assessment completed and penalty levied for late filing of returns--Returns filed beyond period prescribed invalid---No penalty can be levied on basis of invalid returns-- Indian Income Tax Act, 1961, S.271(1)(a).
The assessee filed returns for the assessment years 1971-72 to 1975-76 belatedly and the Assessing Officer levied penalty under section 271(1)(a) of the Income Tax Act, 1961, for delay in filing returns. The Tribunal held that the returns were filed beyond the period prescribed and so they were invalid returns. The Assessing Officer had issued notice under section 148, but no returns were filed in response to such notice. Therefore, the Tribunal came to the conclusion that no penalty could be levied on the basis of invalid returns and, as such, the penalty had to be cancelled. On a reference:
Held, that the Tribunal was right in law in cancelling penalties imposed on the assessee under section 271(1)(a) of the Indian Income Tax Act, 1961, for the assessment years 1971-72 to 19'75-76.
A. Adhikari for the Commissioner. .
B.L. Nema for the Assessee
JUDGMENT
A.K. MATHUR, C.J.---This is a reference under section 256(1) of the Income Tax Act 1961, at the instance of the Revenue and the following question of law has been referred by the Tribunal for answer of this Court:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling penalties imposed on the assessee under section 271(1)(a) of the Income Tax Act, 1961, for the assessment years 1972-73 to 1975-76?"
The brief facts giving rise to this reference are these: The matter relates to imposition of penalty under section 271(1)(a) of the Income Tax Act. Returns for various years were filed belatedly. The, following chart would show the delay in filing the returns and the penalties imposed by the Assessing Officer therefor:
| Assessment year | Return due on | Return filed on | Delay in months | Penalty imposed Rs. |
| 1971-72 | 30-6-1971 | 25-11-1976 | 70 | 1,440.00 |
| 1972-73 | 30-6-1972 | 25-11-1976 | 58 | 6,754.00 |
| 1973-74 | 30-6-1973 | 25-11-1976 | 46 | 7,650.00 |
| 1974-75 | 30-6-1974 | 30-6-1978 | 47 | 9,880.00 |
| 1975-76 | 30-6-1975 | 30-6-1978 | 35 | 4,625.00 |
An appeal was preferred by the assessee and, ultimately, the order was upheld by the Appellate Assistant Commissioner. The matter then 1997 reached the Tribunal. The Tribunal, after examining the matter, came to the conclusion that the returns being invalid, no penalty could be levied for the delay in filing the returns and, therefore, the penalties levied for all the invalid returns had to be cancelled. Hence, the present reference has been made by the Tribunal for answer of this Court.
It is an admitted position that the returns were filed by the assessee belatedly and, therefore, the penalties were levied, but in fact the assessment was made after giving notice under section 148 to the party, but the party did not file the returns and the Assessing Officer made assessment on the basis of those invalid returns. The returns were filed beyond the period prescribed and, therefore, the Tribunal held that they were not returns in the eye of law and, therefore, they were invalid returns. Since, the returns were found to be invalid, the Tribunal came to the conclusion that levying of penalty on that basis was also invalid as the returns could not be used for assessing the tax liability.
The view taken by the Tribunal appears to be justified and there is no reason to interfere.
In the result, the reference is answered against the Revenue and in favour of the assessee.
M. B. A./1192/FCReference answered.