Commissioner of Income Tax vs Shyamacharan Gopicharan

N.D. Ojha, C.J.—In compliance with the direction issued by this court on December 5, 1980, in M.C.C. No. 362 of 1976, the Income Tax Appellate Tribunal, Nagpur, has referred the following two questions to this court for its opinion :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that Section 140A(3) of the Income Tax Act, 1961, is violative of Article 19(1)(f) of the Constitution ?

Whether the Appellate Tribunal had the jurisdiction to hold that Section 140A(3) is violative of Article 19(1)(f) of the Constitution?"

The facts in a nutshell necessary to answer the aforesaid questions are that penalty in the sum of Rs. 6,000 was imposed on the assessee u/s 140A(3) of the Act after rejecting the assessee''s explanation. An appeal was preferred by the assessee against that order which was dismissed. The matter was taken up by the assessee in second appeal before the Income Tax Appellate Tribunal which took the view that the penalty was illegal inasmuch as Section 140A(3) of the Act had been declared ultra vires Article 19(1)(f) of the Constitution by the Madras High Court A.M. Sali Maricar and Another Vs. Income Tax Officer and Another, ).

As regards question No. 1 referred to above, suffice it to point out that in Commissioner of Income Tax Vs. Vrajlal Manilal and Co., , a Division Bench of this court has held that Section 140A(3) of the Act cannot be held to be confiscatory and unreasonable. This court has, in taking the aforesaid view, disagreed with the view expressed by the Madras High Court to the contrary which was relied on by the Income Tax Appellate Tribunal. The aforesaid decision of the Madras High Court was rendered in the case of A.M. Sali Maricar and Another Vs. Income Tax Officer and Another, .

In view of the decision of this court in the case of Commissioner of Income Tax Vs. Vrajlal Manilal and Co., , question No. 1 referred to above is answered in the negative, against the assessee and in favour of the Department.

As regards question No. 2, we are of the opinion that in view of our answer to question No. 1, it is not necessary to answer this question. Parties shall, in the circumstances of the case, bear their own costs.