TaxTMI 
TaxTMI 
2002 (5) TMI 13
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....ax Appellate Tribunal was right in law in holding that no penalty is leviable even though they have held that the assesses has committed a default without reasonable cause? 3. Whether the Income-tax Appellate Tribunal is right in observing that the words 'deductible' or 'collectible' used in the amended provisions of section 272A(2)(c) with effect from October 1, 1991, mean the amount of tax which remains to be 'deducted' or 'collected'? 4. Whether the Income-tax Appellate Tribunal was right in law in holding that the monetary limit in respect of penalty under section 272A(2)(c) prescribed with effect from October 1, 1991, was applicable to defaults committed earlier as well? 5. Whether the Tribunal was right in law in holding that....
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....ppeal. In the second appeal before the Income-tax Appellate Tribunal, the plea of ignorance of law was rejected. However, the Tribunal held that in view of the proviso appended to section 272A(2), the levy of penalty was unsustainable. The Tribunal held that the amount of tax already deducted should normally not attract the levy of penalty and it is the amount of tax not deducted or remaining uncollected, which attracts penalty under the amended provisions of law. The Tribunal found that in the instant case, there was no amount of tax "deductible" or "collectible" and, as such, there could be no levy of penalty under section 272A(2)(c) of the Act. As regards the applicability of the amended provision, the Tribunal observed that the amendmen....
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.... under sections 206 and 206C shall not exceed the amount of tax deductible or collectible, as the case may be." A plain reading of the above provision makes it clear that section 272A(2) provides the mechanism for working out the amount of penalty which may be imposed, inter alia, for default of furnishing the return under section 206 beyond the prescribed limit. The penalty is to be calculated with reference to the days of default and computed at the prescribed rates. In the application of the prescribed rates, the authority levying the penalty has been given some discretion. The proviso to section 272A(2) provides an outer limit, to the extent the penalty may be imposed. It provides that a penalty shall not exceed the amount of tax ded....
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....e contained in the proviso to section 272A(2) has an overriding effect over the main provisions contained in section 272A(2). It, therefore, follows that in a case wherein there is no amount of tax 'deductible' or 'collectible' as the case may be, no penalty under section 272A(2)(c) can be levied, the period of default notwithstanding. In the instant case since, admittedly, there was no amount of tax deductible or collectible, there can be no levy of penalty under section 272A(2)(c) of the Act." We are unable to agree with the aforesaid view of the Tribunal, A plain reading of the provision clearly shows that it only provides an outer limit of the penalty. The words "deductible" or "collectible" have been used only with reference to the ....
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....tter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." Thus, the penalty under section 272A(2)(c) cannot be levied in a routine manner. The discretion vested with the authority is to be exercised judiciously on consideration of all the relevant circumstances. A bona fide breach cannot lead to a penalty under section 272A(2)(c). In the in....