COMMISSIONER OF INCOME TAX vs. NARESH TEXTILES

ITR/41/1992HC GujaratGJHC24015392199223 December 2004Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI3 pages
AI SummaryRemanded

What were the facts?

The Income Tax Appellate Tribunal (ITAT) cancelled penalties imposed on the assessee, Naresh Textiles, under Section 271(1)(a) of the Income Tax Act, 1961, for assessment years 1978-79 and 1979-80. The penalties were levied because the returns of income were filed late. For AY 1978-79, the return due on 31-07-1978 was filed on 27-05-1981, resulting in a penalty of Rs. 7,750. For AY 1979-80, the return due on 31-07-1979 was filed on 16-07-1981, leading to a penalty of Rs. 5,040. The ITAT's decision was based on the ground that the advance tax paid by the assessee was more than the assessed tax, implying the assessee's conduct was not contumacious. The Commissioner of Income Tax (Revenue) referred the matter to the High Court.

What did the High Court hold?

The High Court held that the Tribunal was not justified in cancelling the penalty solely on the ground that advance tax paid was in excess of the assessed tax, and a refund was due. The Court referred to its own prior decisions which indicated that this fact alone does not absolve the assessee from penalty. However, the Tribunal had not considered whether the assessee had a reasonable cause for the delay in filing the return of income. Therefore, the question referred was answered in favour of the Revenue and against the assessee. The High Court directed that the Tribunal should decide the issue of whether the assessee was prevented by a reasonable cause from filing the return within the prescribed time, after giving both parties an opportunity to be heard. The reference was disposed of accordingly.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in cancelling the penalties imposed on the assessee under Section 271(1)(a) on the ground that the advance tax paid was more than the tax determined on assessments? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's reasoning, which the assessee would have supported, was that where advance tax paid exceeded assessed tax, the assessee's conduct was not contumacious, thus no penalty was leviable. The ITAT relied on its own order in M/s. Dhirajlal and Brothers. Revenue's Contention: The Revenue argued that the ITAT's view was erroneous in light of this Court's decisions in Commissioner of Income Tax Vs. Textile & General Engineer Co., Commissioner of Income Tax Vs. Natverlal Jivanlal, and Commissioner of Income Tax Vs. Dipak Construction Co. The Revenue contended that merely paying advance tax in excess of assessed tax did not justify cancelling the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(a),Section 256(1),Section 260(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No.41 of 1992

For Approval and Signature:

HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned

The order continues below.

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