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Judgment
Balasubrahmanyan, J.—These references relate to the quantification of the penalty levied under s. 271(1)(a) of the I.T. Act, 1961. This
question is now governed by a statutory provision retrospectively brought into force the effect from the commencement of the I.T. Act, 1961.
After the retrospective amendment, the penalty leviable under s. 271(1)(a) is to be on a certain percentage of the assessed tax. An Explanation
added by the retrospective amendment legislation defines ""assessed tax"" as meaning ""tax as reduced by the sum, if any, deducted at source under
Chap. XVII-B or paid in advance under Chap. XVII-C"". In the present case, the Appellate Tribunal expressed the view that in determining the
amount of tax on which penalty under S. 271(1)(a) is to be calculated the tax paid by the assessee pursuant to a provisional assessment made
under S. 141 should be excluded. Having regard to the terms of the Explanation which we have referred to, the only amounts which are to be
deducted from the assessed tax are the taxes deducted at source and the advance tax paid by the assessee. Tax paid by the assessee under a
provisional assessment is a tax paid on assessment, although it is provisional, and it is not covered either by Chap. XVII-B or by Chap. XVII-C as
taxes deducted at source or taxes paid in advance. Hence, the Tribunal''s view that the provisional tax should be deducted from the quantum of the
tax for calculating the penalty is not correct. However, the Tribunal, at the time when it rendered its decision, could not have anticipated the
subsequent retrospective amendment in the statute effected by the T.L. (Amend.) Act, 1974. Having to disposal of a tax reference, we are,
however, bound to take note of a retrospective change in the law which has come to our notice at the time of answering the reference.
We according dispose of the reference in the light of the current provisions of s. 271(1)(a) of the Act read with the Explanation to which we
have earlier made reference.
The following two questions of law have been referred to us by the Tribunal. But, it is not disputed that both the questions can be answered by
reference to the amended provisions in the manner we have already indicated.
Questions of law.
(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in the determination of the amount of tax on
which the penalty is to be levied u/s 271(1)(a) ?
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the tax paid in pursuance of
the provisional assessment made u/s 141 should be deducted from the tax determined as chargeable for the purpose of levy of penalty u/s 271(1)
(a) ?
Our answer to the two questions is in the negative and against the assessee. Therefore will, however, be no order as to costs.