Commissioner of Income Tax and Another vs Jain Colonizers P. Ltd.

The present appeal filed u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), against the order dated August 3, 1999, passed by the Income Tax Appellate Tribunal, Delhi, has been admitted, vide order dated December 10, 2002, on the following substantial question of law:

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally justified in upholding the decision of the Commissioner of Income Tax (Appeals) in reducing the penalty u/s 272A(2)(c) from Rs. 99,500 to Rs. 2,337 for the assessment year 1989-90 whereas the relevant amendment made to this Section came into effect with effect from October 1, 1991, only.

The appeal relates to the assessment year 1989-90 in respect of penalty imposed u/s 272A(2)(c) of the Act.

Briefly stated, the facts giving rise to the present case are as under:

The respondent-assessee commenced its business during the year 1989-90. It was required to deduct tax and pay to the Government exchequer the tax was deducted. However, statement in Form No. 26A which was required to be filed by June 30, 1989, was not filed. Penalty proceedings were initiated, vide notice dated March 5, 1992. The reply was submitted on May 1, 1992. Form No. 26A was filed on January 20, 1992. The total amount of tax deductible was Rs. 2,337. The assessing authority imposed Rs. 99,500 as penalty treating the period of penalty by 995 days and Income Tax (Appeals), Meerut, partly allowed the appeal and reduced the penalty to Rs. 2,337, which order has been upheld by the Tribunal.

We have heard Sri A.N. Mahajan, learned Counsel for the Revenue and Sri R.R. Agrawal, learned Counsel for the respondent.

Sri Mahajan submits that the proviso to Section 272A(2) of the Act was inserted by the Finance (No. 2) Act of 1991 with effect from October 1, 1991, which restricted the maximum amount of penalty imposable for non- furnishing of return or the prescribed form under Sections 206 and 206C and statement under Sub-section (3) of Section 200 to the amount of tax deductible or collectable, as, the case may be, and as the present case relates to the assessment year 1989-90 the Tribunal has committed an error of law in upholding the order of the Commissioner of Income Tax (Appeals) in reducing the penalty to the amount of tax deductible, i.e., Rs. 2,337. The submission is wholly misconceived. It is not in dispute that Form No. 26A was filed on January 20, 1992. Non-filing of form, as required, is a continuing offence. See Maya Rani Punj Vs. Commissioner of Income Tax, Delhi, Therefore, law which was applicable on the date when the form was filed would be applicable which in the present case is January 20, 1992. The proviso to Sub-section (2) of Section 272A of the Act was on the statute book having been inserted with effect from October 1, 1991. The maximum amount of penalty, therefore, cannot exceed the amount of tax deductible, i.e., Rs. 2,337 in the present case.

We, therefore, do not find any illegality in the order of the Tribunal. The appeal fails and is dismissed.