COMMISSIONER OF INCOME TAX Vs. SUGAN CHAND AND SONS

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961 (for short "the Act"), at the instance of the Revenue, to answer the following question of law, viz.:

(2.) THE relevant assessment year is 1974-75. THE return of income was required to be filed by the assessee on or before July 31, 1974, but it was actually filed late on December 15, 1975. THE Income-tax Officer, therefore, initiated penalty proceedings under Section 271(1)(a) of the Act. THE Income-tax Officer levied penalty of Rs. 2,580. THE assessee preferred an appeal to the Appellate Assistant Commissioner who held that the maximum penalty could not exceed 50% of the assessed tax and since the amount of assessed tax was only Rs. 1,407, it was held that the penalty could not exceed Rs. 700. THE amount of penalty was, therefore, reduced accordingly. On further appeal, the Income-tax Appellate Tribunal has affirmed the view of the Appellate Assistant Commissioner. Hence, this reference at the instance of the Revenue.