Advance tax exceeding assessed tax bars penalty computation under section 271(1)(a) when no taxable balance remains.

Penalty under section 271(1)(a) was held inapplicable where advance tax already paid exceeded the assessed tax, because the statutory percentage penalty could not operate without any remaining assessed tax base. The court distinguished an earlier Madras decision on the ground that it involved a payment made otherwise than as advance tax and before the penalty order, which did not affect the present computation issue. On the facts stated, no balance remained on which penalty could be levied, so the reference was answered in favour of the assessee.

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Issues: Whether penalty under section 271(1)(a) was leviable when the assessee had paid advance tax in excess of the tax assessed.

Analysis: The default provision in section 271(1)(a) read with its Explanation makes the levy dependent on the existence of assessed tax on which the percentage penalty can operate. Where advance tax has been paid and the amount so paid exceeds the assessed tax, no balance remains for computation of penalty. A payment made otherwise than as advance tax and before the penalty order does not attract the same consequence, and the earlier Madras decision dealing with that situation was distinguished on that basis.

Conclusion: Penalty was not leviable in the present facts, and the reference was answered in favour of the assessee.

Final Conclusion: The legal position applied was that advance tax paid in excess of the assessed tax leaves no basis for computation of penalty under the provision invoked.

Ratio Decidendi: Where the assessee has already paid advance tax exceeding the assessed tax, penalty calculated as a percentage of assessed tax is not leviable because there is no amount on which the statutory computation can operate.

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