1982 (6) TMI 45

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.... with s. 271(2) of the I.T. Act, 1961, hereinafter " the Act ". As for the other assessment year the penalty of Rs. 27,360 was imposed. Calculation in both the cases was at the rate of 2% per month for the period of default. On appeal being preferred before the AAC, the penalty orders were set aside. On further appeal by the Department, the Tribunal upheld the order of the AAC. On a prayer for reference to this court the following question has been referred: "Whether, on the facts and in the circumstances of the case, the assessee being a registered firm was liable to pay penalty under s. 27l(1)(a) read with s. 271(2) even though the assessed tax within the meaning of Explanation to section 271 was a negative figure ? " It may be stat....

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....essed if it were to be treated as an unregistered firm as mentioned in s. 271(2). In such an eventuality it is apparent that the " notional assessed tax " would be more, may be, much more and even if reduction is made for the advance tax paid under Chap. XVII-C, the firm would become liable to penalty. This contention was, however, not accepted in the aforesaid case because sub-s. (2) operates only when person is " liable to penalty ". It was held in Maskara Tea Estate [1981] 130 ITR 955 (Gauhati) by this court that the liability to penalty has to be determined with reference to what has been stated in sub-s. (1), and that too not by confining one's attention to cl. (a) but also by adverting to cl. (i)(b) read with its Explanation. If it is....