1983 (9) TMI 60 - HC - Income Tax

High Court grants relaxation under Taxation Concessions Order, reduces penalty significantly.

The High Court held that the assessee was entitled to the relaxation under para. 17 of the Taxation Concessions Order, reducing the penalty from Rs. ... Failure To File Return In Time, Penalty Issues:Assessment of penalty under section 271(1)(a) of the Income Tax Act for failure to file a return of income under section 139(1) for the assessment year 1963-64. Interpretation of the Dadar and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964 in relation to the imposition of penalties.Analysis:The judgment pertains to a case where the assessee, a resident of Daman, had income in both Daman and Bombay for the assessment year 1963-64. The Income Tax Officer (ITO) imposed a penalty of Rs. 3,43,140 on the assessee for not filing a return of income under section 139(1). The assessee appealed to the Appellate Assistant Commissioner (AAC), who directed a small relief without specifying the exact amount and upheld the penalty under section 271(1)(a). The matter was then taken to the Tribunal, where the penalty was reduced to Rs. 1,000 based on the interpretation of the Dadar and Nagar Haveli and Goa, Daman and Diu (Taxation Concessions) Order, 1964.The key issue revolved around whether the assessee was entitled to the benefits under para. 17 of the Taxation Concessions Order for income received in Bombay. The Tribunal held that the assessee was eligible for the relaxation under para. 17, reducing the penalty to Rs. 1,000. The High Court analyzed the provisions of para. 17 and concluded that the relaxation was available to the assessee, as he fell within the scope of the Order. The Court emphasized that there were no limitations or qualifications in para. 17 regarding the income source for which the penalty reduction could be applied.The Court rejected the argument that the relaxation under para. 17 should only apply to income earned in the erstwhile Portuguese territory and not in India. It clarified that para. 17 did not contain any such restrictions and that the relaxation applied to the total penalty levied. The Court highlighted that the intention of the Legislature was not to limit the relaxation to a specific income source but to provide a broader benefit under para. 17. The judgment emphasized that the Court could not alter statutory provisions based on assumed legislative intent.In conclusion, the High Court answered the referred questions affirmatively in favor of the assessee, stating that the relaxation under para. 17 was applicable to the entire penalty amount, irrespective of the source of income. The Commissioner was directed to pay the costs of the reference to the assessee, concluding the judgment.