Gokal Chand Mittal, J.@mdashThe income tax Appellate Tribunal, Delhi Bench ''B'' has referred the following question of law for our opinion:
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty u/s 273(a) of the income tax Act,
1961, should be levied by reference to the net tax payable on completion of the assessment after giving credit not only for the advance tax paid
and the tax deducted at source but also for the tax paid on self-assessment u/s 140A of the income tax Act, 1961?
The AAC of income tax, ''A'' Range, Rohtak, levied penalty on the assessee u/s 273(a) of the income tax Act, 1961 (hereinafter referred to as ""the
Act""), for the assessment year 1968-69. Against that order, the assessee filed an appeal before the income tax Appellate Tribunal (hereinafter
called ""the Tribunal""), and the Tribunal, by order dated 28th December, 1973, allowed the appeal partly and ordered that, in computing the net tax
payable, besides giving credit for the advance tax paid and for tax deducted at source, the tax paid on self-assessment u/s 140A of the Act should
be excluded for the purposes of levying the penalty. The Commissioner sought a reference on the question of law which has been enumerated
above.
2. The Tribunal, while dealing with the point in issue before us, has stated as follows in its order dated 28th December, 1973:
The penalty, however, should be levied by reference to the net tax payable on the completion of the assessment after giving credit not only for the
advance tax paid and tax deducted at source but also for tax paid on self-assessment u/s 140A. The penalty should be restricted to 10% of the
statutory amount prescribed in section 273, as it was in force on April 1, 1968, on the lines indicated earlier.
3. Shri D.N. Awasthy, appearing for the revenue, has urged that the Tribunal gravely erred in law in ordering the exclusion of tax paid on self-
assessment u/s 140A of the Act in computing the net tax payable for purposes of imposition of penalty u/s 273(a) of the Act. While highlighting the
argument, he has urged that ""assessed tax"" has been defined in section 215(5) of the Act and a reading of section 215(5) shows that the definition
of ""assessed tax"" holds good not only for the purpose of section 215(5) but also for purposes of sections 217 and 273, which means the tax
determined on the basis of regular assessment (reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194,
section 194A, section 194C, section 194D and section 195) so far as such tax relates to income subject to advance tax. Therefore, according to
him, the assessed tax has to be reduced by the advance tax paid and the deductions permissible under the aforesaid sections, which are mostly
deductions at source and the payment of tax by way of self-assessment has not been excluded. A reading of section 273 of the Act shows that it
has reference to the definition of ""assessed tax"", as contained in section 215(5) of the Act and, therefore, for purposes of section 273, the said
definition would be fully applicable. Mr. Awasthy has further urged that from a reading of sections 273 and 215(5), no other view is possible and
the Tribunal has given no reason why the tax paid under self-assessment has to be excluded.
4. From the scheme of the Act, it is clear that there is deduction of income tax either at source, or it is paid in advance, known as advance tax, the
last date for which is by the end of the month of March of the accounting year, and the next is payment of tax on self-assessment, i.e., along with
the return, for which the due date may vary from the end of June to the end of July, which would be subsequent to the accounting year, i.e., after
the close of the accounting year and at least within the first three months of the assessment year. For all these stages, different considerations
prevail and a reading of section 273 along with section 215(5) shows that for purposes of calculation of penalty on default committed u/s 273(a),
assessed tax"" means such determined tax on the basis of regular assessment reduced by the deductions permissible in accordance with the
provisions of sections 192 to 194, section 194A, section 194C, section 194D and section 195 and further subject to advance tax. If the
Legislature wanted to include the amount paid on self-assessment u/s 140A, then it would have been so stated in section 215(5) of the Act. The
omission to include section 140A clearly bears out that nothing paid beyond the last date fixed for the payment of advance tax is to be excluded in
computing the assessed tax on which penalty is payable.
5. Section 140A of the Act has no bearing on this aspect of the matter and it only provides for self-assessment. If the tax due is not paid along with
the return, then under sub-section (3) the assessee becomes liable to pay penalty. But, this penalty has nothing to do with the imposition of penalty
for the default committed u/s 273(a) of the Act.
6. Counsel for the assessee could not raise any reasonable argument to take a different view and, therefore, we find that the Tribunal was in error
in directing that the tax paid on self-assessment u/s 140A should be excluded or credit thereof be given to the assessee in computing the assessed
tax for purposes of levying the penalty. Accordingly, we answer the question in the negative i.e., in favour of the revenue and against the assessee
and hold that the penalty u/s 273(a) of the Act should be levied by reference to the net tax payable on completion of the assessment after giving
credit only for the advance tax paid and the tax deducted at source but not for the tax paid on self-assessment u/s 140A of the Act. There will be
no order as to costs.
Bhopinder Singh Dhillon, J.
I agree.
