Registered firm penalty under section 271 fails where advance tax leaves no positive assessed tax base.

Penal liability for delayed filing by a registered firm must be determined under section 271(1) read with the Explanation, and section 271(2) does not create liability independently where no positive assessed tax remains. "Assessed tax" is the tax actually assessed after credit for advance tax under Chapter XVII-C, not a notional amount computed by treating the firm as an unregistered firm. Where advance tax exceeds the assessed tax and the resulting figure is negative, no penalty can be calculated on a nil or negative base. The 1974 amendment was read consistently with that construction.

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Issues: Whether a registered firm was liable to penalty for delayed filing of returns under section 271(2) where, after giving credit for advance tax, the assessed tax under the Explanation to section 271 was a negative figure.

Analysis: The liability to penalty in the case of a registered firm has to be determined under section 271(1) read with the Explanation, and section 271(2) does not operate independently to create liability where none otherwise exists. The expression "assessed tax" means the tax actually assessed after reduction of advance tax paid under Chapter XVII-C, and it is not to be computed on a notional basis by treating the firm as an unregistered firm. When the advance tax exceeds the assessed tax, the resultant figure becomes negative and there is no positive tax amount on which penalty can be calculated. The amended provision introduced in 1974 also supports this construction.

Conclusion: The registered firm was not liable to penalty on the facts of the case, and the reference was answered in the negative in favour of the assessee.

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