MAYA RANI PUNJ vs. COMMISSIONER OF INCOME TAX, DELHI,

CIVIL APPEAL No. 1943/1974Supreme Court1985 INSC 24811 December 1985Bench: 3 JudgesAuthor: V.D. TULZAPURKAR, SABYASACHI MUKHERJI, RANGANATH MISRA MAYA RANI PUNJ16 pages
AI SummaryDismissed

What were the facts?

The assessee, Maya Rani Punj, failed to file her income tax return for the assessment year 1961-62 by the due date of September 28, 1961. She filed the return on May 3, 1962, over seven months late, without seeking an extension. The Income Tax Act of 1961 came into effect on April 1, 1962. The Income Tax Officer initiated penalty proceedings under Section 271(1)(a) of the 1961 Act, imposing a penalty of Rs. 4,060. The Appellate Assistant Commissioner upheld the penalty. The Appellate Tribunal, however, held that while penalty was leviable under the 1961 Act, its quantum should be determined under the 1922 Act, reducing the penalty to Rs. 400. The Revenue referred the matter to the High Court, which ruled in favour of the Revenue, holding that Section 271(1) of the 1961 Act was applicable for defaults under the 1922 Act and that the penalty, if levied, had to be at the prescribed rate.

What did the Supreme Court hold?

The Supreme Court held that the provisions of Section 271(1)(a) of the Income Tax Act, 1961, were fully applicable, and the demand for penalty was justified within the limits of the law. The Court reasoned that for the imposition of penalty, the satisfaction of the income tax authorities that a default had been committed was crucial, and the relevant date for initiating penalty proceedings was when the Income Tax Officer decided to do so, following the completion of the assessment. The Court found that the non-filing of a return under Section 271(1)(a) of the 1961 Act was a continuing default, commencing from the date of default and continuing monthly until compliance. The rule of 'de die in diem' was applicable on a monthly basis. The Court noted that Section 26 of the 1922 Act only provided the upper limit of penalty, unlike the prescribed rate in Section 271(1)(a) of the 1961 Act. The Court dismissed the appeal, affirming the High Court's view.

What were the issues?

1. Whether the Tribunal was legally competent to reduce the penalty levied under Section 271(1)(a) of the Income Tax Act, 1961, to an amount lower than the prescribed rate for a continuing default, considering the assessment year fell under the 1922 Act but the penalty proceedings were initiated under the 1961 Act. Assessee's contention: The Tribunal correctly applied the provisions of the 1922 Act for quantifying the penalty, as the default occurred prior to the 1961 Act coming into force. Revenue's contention: Section 271(1) of the 1961 Act was applicable to the levy of penalty for defaults committed under the 1922 Act. The word 'may' in Section 297(1) of the 1961 Act vested discretion in the Income Tax Officer to levy or not levy a penalty, but if a penalty was decided upon, it had to be at the prescribed rate. The High Court relied on Section 297(2)(j) of the 1961 Act.

Which sections of the Income-tax Act were involved?

Section 28,Section 271(1)(a),Section 297(1),Section 297(2)(j),Section 22,Section 139,Section 274(1),Section 275,Section 26

AI-generated summary — verify with the full judgment below

827 MAYA RANI PUNJ v. COMMISSIONER OF INCOME TAX, DELHI, DECEMBER 11, 1985 [V ,0, TULZAPURKAR, SABYASACHI MUKHARJI AND RANGANATH MISRA, JJ ·] Income Tax Act 1922 : Section 28, Income Tax Act 1961: Sections 271 (l)(a), 297(1) and 297(2)(j). lJelay in f illng return for assessment year under 1922 Act - Penalty - Quantum of - Determination - 1961 Act coming into effect - Discretion to reduce penalty fixed under new Act - Provision of new Act -·Availability of.

Imposition of penalty - Assessment year or date of filing return - Not material - Satisfaction of assessing authority that default occurred - Importance of.

Return - Non-filing of -whether a continuing default. A B c D The appellant is the ·assessee. The year of assessment was 1961-62. The return was due by September 28, 1961 but the same was neither. filed within that time, nor was any extension asked E for. The assesses filed the return on May 3, 1962 beyond more than seven ·months of the due date. With effect from April 1, 1962 the Income Tax Act of 1961 had come into force, The . Income Tax Officer finding that the assessee had not been prevented by any reasonable cause for not complying with the st

The order continues below.

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