Penalty for belated return filing fails where tax deducted at source exceeds assessed tax and no computable base remains.

Penalty for delayed filing of a return was not leviable where tax deducted at source exceeded the assessed tax and no tax remained payable. The Madras HC applied the principle that a penalty under section 271(1)(a) cannot be computed unless there is an amount on which the statutory percentage can operate, and held that the source of the excess payment, whether tax deducted at source or advance tax, made no material difference because the assessed tax was fully covered. The Tribunal's cancellation of penalty was therefore upheld in favour of the assessee.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961, was leviable for belated filing of the return when the tax deducted at source exceeded the assessed tax and resulted in no tax payable.

Analysis: The assessment year involved was 1973-74, and the return was filed beyond the due date. The Court applied the earlier principle that penalty under section 271(1)(a)(i)(b) cannot be computed where there is no amount on which the prescribed percentage can be calculated. It held that the fact that the excess tax arose from tax deducted at source, rather than advance tax, did not make a material difference, because in both situations the tax already paid or deducted exceeded the tax determined on assessment. In such circumstances, the statutory basis for computing penalty failed.

Conclusion: Penalty was not leviable under section 271(1)(a) of the Income-tax Act, 1961, and the cancellation of penalty by the Tribunal was correct, in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the tax deducted at source exceeds the assessed tax so that no amount remains on which the statutory percentage penalty can be calculated, penalty for delayed filing of the return under section 271(1)(a) is not leviable.

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