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1996 DIGILAW 196 (MAD)

V. Govinda Chetty v. Commissioner of Income Tax

1996-02-15

K.A.THANIKKACHALAM, N.V.BALASUBRAMANIAN

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Judgment :- K. A. THANIKKACHALAM J. At the instance of the assessee, the Tribunal referred the following two questions for the opinion of this court under section 256(1) of the Act. "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in confirming the penalty imposed under section 140A(3) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the decision of the Madras High Court in Sali Maricar's case 1973 (90) ITR 116 would not apply to the provisions of section 140A after the amendment made with effect from April 1, 1976 ?" The assessee's major income was from the firm, Viswanathan Textiles. The assessee filed his return of income for the assessment year 1976-77 on February 17, 1977, declaring a total income of Rs. 68, 575. This was accepted by the Income-tax Officer and the assessment was completed in November, 1977. The Income-tax Officer noticed that the assessee had not paid the self-assessment tax as required under section 140A(1) of the Act and so under sub-section (3) of section 140A, the assessee is liable to pay penalty. A show-cause notice was issued by the Income-tax Officer. The assessee sent a reply stating that in view of the decision of the Madras High Court in Sali Maricar's case 1973 (90) ITR 116 the levy of penalty for the non-compliance of the provisions of section 140A(1) was not legal. According to the Income-tax Officer, the provisions of section 140A of the Act were amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, and the penal provisions contained in sub-section (3) of section 140A had been drastically altered by an amendment Act of 1975 with effect from April 1, 1976. The assessee's previous year ended on April 12, 1976, and the return was filed on February 17, 1977. Therefore, the Income-tax Officer found that the decision of the Madras High Court in Sali Maricar's case 1973 (90) ITR 116 is not applicable to the amended provisions of the Act. Before the Income-tax Officer, the assessee pleaded that the amended provisions of section 140A(3) are ultra vires. Therefore, the Income-tax Officer found that the decision of the Madras High Court in Sali Maricar's case 1973 (90) ITR 116 is not applicable to the amended provisions of the Act. Before the Income-tax Officer, the assessee pleaded that the amended provisions of section 140A(3) are ultra vires. However, the Income-tax Officer pointed out that since the Income-tax Officers are functioning under the statute, they cannot go into the question of the vires of the provisions of the Act. Accordingly, the Income-tax Officer levied a penalty of Rs. 5, 696. On appeal, the Appellate Assistant Commissioner confirmed the order passed by the Income-tax Officer. On further appeal filed by the assessee, the Appellate Tribunal confirmed the order passed by the Appellate Assistant CommissionerBefore us, learned counsel appearing for the assessee submitted that the order passed by the Tribunal confirming the penalty imposed by the Income-tax Officer under section 140A(3) is not sustainable. According to learned counsel for the assessee, the assessee must be given an opportunity to explain the reasonable cause for the delay in payment of the self-assessment tax. Therefore, it was submitted that the order passed by the Tribunal is not sustainable. On the other hand, learned standing counsel appearing for the Department while supporting the order passed by the Tribunal, relied on the decision of this court made in the case of Ooty Dasaprakash v. ITO [1994] 5 MTCR 50, wherein this court declared that the amended provisions of section 140A(3) are constitutionally valid and do not suffer from unconstitutionality We have heard learned counsel for the assessee as well as learned standing counsel for the Department. The self-assessment tax was not paid in time. In the assessment year 1976-77, the amended provisions of section 140A came into force with effect from April 1, 1976. The assessee's previous year ended on April 12, 1976, and the return was filed on February 17, 1977. Therefore, the amended provisions of section 140A are applicable to the facts of this case. For the delay in payment of self-assessment tax, the assessee sent a reply before the Income-tax Officer stating that in view of the decision of this court in Sali Maricar's case 1973 (90) ITR 116 no penalty under section 140A(3) is exigible. Therefore, the amended provisions of section 140A are applicable to the facts of this case. For the delay in payment of self-assessment tax, the assessee sent a reply before the Income-tax Officer stating that in view of the decision of this court in Sali Maricar's case 1973 (90) ITR 116 no penalty under section 140A(3) is exigible. After the amended provisions came into force, the decision rendered in the case of Sali Maricar 1973 (90) ITR 116 (Mad) has become no longer a good law. Further, the assessee has not given any reasonable cause for not paying the self-assessment tax in time. In the absence of any reasonable cause, it is not possible to cancel the penalty levied under section 140A(3) of the Act. In this view of the matter, we answer the questions referred to us in the affirmative and against the assessee. No costs.