Commissioner of Income Tax vs Adu Ram

This is a reference u/s 256(1) of the Income Tax Act, 1961, ("the Act"), at the instance of the Revenue to answer the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified legally in holding that no penalty u/s 271(1)(a) of the Income Tax Act, 1961, is leviable in the case of the asses-see, a registered firm, because it had no tax liability in terms of the Explanation to Section 271(1)(a) and that the provisions of Section 271(2) did not govern the field in this case ?"

The relevant assessment year is 1978-79. The question as well as the facts on which this question arises is the same as in Commissioner of Income Tax Vs. Builders Engineers Co., Following that decision and for the same reasons, this reference has to be answered in the negative.

Consequently, the reference is answered against the Revenue and in favour of the assessee by holding that the Tribunal was justified in taking-the view that no penalty u/s 271(1)(a)(i)(b) of the Act is leviable against the assessee, a registered firm, because it had no tax liability within the meaning of the expression "assessed tax" given in the Explanation to Sub-clause (i)(b) of Clause (a) of Sub-section (1) of Section 271.

No costs.