1975 (9) TMI 33

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....rcumstances of the case, the Tribunal was justified in holding that the issue of a notice is a condition precedent for the levy of penalty under section 41(1) of the Agricultural Income-tax Act, 1950 ? 3. Whether, on the facts and circumstances of the case, the principles of natural justice are violated in view of the provisions in section 41(1) of the Agricultural Income-tax Act, 1950 ? 4. Is not the reasoning and conclusion of the Appellate Tribunal vitiated due to non-advertence of the crucial fact that there was no motion or application by the assessee in the instant case, under section 40, to treat him as not in default pending the appeal? " All these questions are connected and have to be answered on the interpretation to be ....

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....that this should be done. Apart from this the power conferred by section 41(1) is a discretionary power. Perhaps this is a more important aspect. This means that the officer is not bound to impose the penalty. He will have to exercise his judicial discretion in regard to the question. The default may be a technical default. The payment of the tax might have been made the next day after the date on which it was due. There might be justifiable reasons for the delayed payment of tax. If the officer is informed about such circumstances he may not impose the penalty or only impose a nominal penalty. So in all the circumstances it will be proper, just and fair if before penalty is imposed an opportunity is granted to the assessee to state what he....

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....efore penalty under section 41(1) is imposed. In the light of the above, we answer question Nos. 1 and 2 in the affirmative that is in favour of the assessee and against the department. We answer question No. 3 also in the affirmative and question No. 4 in the negative. The assessee has not appeared before us. We direct the parties to bear their respective costs. A copy of this judgment under the seal of the court and the signature of the Registrar will be sent to the Agricultural Income-tax Appellate Tribunal, Trivandrum. Appendix "40. Recovery of tax and penalties.-Any amount specified as payable in a notice of demand under section 30 or an order under sections 31, 32 or 33 shall be paid in such number of instalments, withi....