1997 (8) TMI 39

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....osing penalty on the assessee under section 271(1)(a) of the Income-tax Act, 1961? (2) Whether the order of the Tribunal is bad and vitiated in law in not considering the facts and circumstances of the case like filing of statement of income/estimate income, paying advance tax, filing Form No. 12, filing Form No. 6 and return during amnesty period, etc., and not passing a speaking order in regard to facts, thus overlooking material evidence? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee R. F. was liable to penalty under section 271(1)(a) read with sub-section (2) of section 271 of the Income-tax Act in spite of the fact that the assessee had no 'assessed tax'....

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....ars in question. Against this order, the Revenue filed an appeal before the Tribunal. The Tribunal reversed the order of the Deputy Commissioner of Income-tax (Appeals) referring to a decision of this court in the case of CIT v. Bhabuti Contractor [1990] 183 ITR 445. Hence, the assessee made an application before the Tribunal under section 256(1) of the Income-tax Act for referring the matter before this court. The Tribunal held that in view of the decision of the High Court of Madhya Pradesh on the issue that notwithstanding the fact that the tax has been paid in advance, still penalty can be levied under the provisions of section 271(1)(a) of the Act. The Tribunal rejected the application under section 256(1) of the Act on the above groun....

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....ases where even though liability to penalty may have accrued, but on account of certain circumstances in the ultimate analysis, no penalty or a nominal penalty may be levied. Simply because, ultimately, at the stage of quantification of the amount of penalty, no penalty may be payable, it cannot be said that the provision making a person liable to penalty on the ground of default committed by him, is to be treated as otiose on that ground. If such a view is taken, it would encourage violation of the provisions of clause (a) of sub-section (1) of section 271 by a registered firm on the pretext that the advance tax which, according to it, was payable had been paid and, consequently, it was not at all necessary for it to file any return. This ....