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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether, for the purpose of penalty under section 271(1)(a), a registered firm is to be treated as an unregistered firm in computing the penalty under section 271(2).
Analysis: Penalty under section 271(1)(a) is attracted for failure to furnish the return within time without reasonable cause, and the measure of penalty is linked to the assessed tax. Section 271(2) creates a legal fiction for cases where the defaulter is a registered firm, requiring the penalty under section 271(1) to be the same as would be payable if the firm were unregistered. On the facts, the default was established and the penalty was computed on that basis, after giving effect to the adjustment required by the statute. The challenge to the quantum of penalty as excessive could not be examined, as it had not been raised before the appellate tribunal and did not arise from the reference.
Conclusion: The penalty was correctly computed by treating the registered firm as an unregistered firm, and the answer is in the affirmative, in favour of the Revenue.
Final Conclusion: The reference was answered by upholding the departmental view on computation of penalty for a registered firm in default, while declining to examine the unraised challenge to the quantum of penalty.
Ratio Decidendi: Where section 271(2) applies, the statutory fiction must be carried to its logical extent and penalty for a registered firm in default is to be computed as if it were an unregistered firm.
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