1989 (3) TMI 99

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....m, is the point in issue here. The assessee, Harish Chand and Co., was required to file its return of income on or before July 31, 1978. It did not, however, file any such return till April 7, 1982. Penalty proceedings were consequently initiated against it under section 27 of the Act. In dealing with this matter, it was found that the tax payable by the assessee was Rs. 2,550 whereas the tax deducted at source was Rs. 4,050. This being so, no tax was assessed as payable when the assessment was framed. The Income-tax Officer, however, proceeded to assess and impose a penalty of Rs. 7,660 treating the assessee as an unregistered firm for the purpose of calculation of this penalty. This penalty was, however, deleted in appeal by the App....

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....as Mannalal v. CIT [1985] 152 ITR 261 (Pat) [FB] and CIT v. Govindram and Co. [1987] 168 ITR 613 (Bom). In the forefront of the contrary opinion is the judgment of the High Court of Rajasthan in CIT v. Builders Engineers Co. [1989] 175 ITR 317, where it was held that if the entire amount of tax has already been paid, being deducted at source or paid in advance, the question of imposing any penalty on the "assessed tax" does not arise because no tax is actually due. It was explained in this behalf that the penalty which can be imposed is " sum equal to 2% of the assessed tax for every month during which the default continued". The expression "assessed tax" in this context means "tax as reduced by the sum, if any, deducted at source, under....