Sabyasachi Mukharji, J. - (1.) The assessee is in appeal by special leave challenging the decision of the Delhi High Court reported in (1973) 92 ITR 394.
(2.) The year of assessment is 1961-62. The return was due by September 28,1961, but the same was neither filed within that time, nor was any extension asked for. The assessee 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 ('1961 Act' for short) had come into force. The Income-tax Officer took proceedings under section 271(1)(a) of the 1961 Act and imposed a penalty of Rs. 4,060/- for failure to furnish the return within the time on a finding that the assessee had not been prevented by any reasonable cause for not complying with the statutory obligation to make the return. The assessee challenged the imposition of penalty by preferring an appeal to the Appellate Assistant Commissioner who refused to interfere and dismissed the appeal. On further appeal, the Appellate Tribunal held that penalty was leviable under the 1961 Act but the amount of penalty had to be quantified according to the provisions of section 28 of the Income Tax Act, 1922 ('1922 Act' for short). Applying the provisions of the 1922 Act, the Tribunal reduced the penalty to Rs. 400/-. At the instance of the Revenue the following question was referred to the High Court under section 256(1) of the 1961 Act: "Whether on the facts and in the circumstances of the case, the Tribunal was in law competent to reduce the penalty levied under S. 271(1)(a) to a figure lower than the sum equal to 2% of the tax for every month during which the default continued but not exceeding the aggregate 50% of the tax - The High Court answered the reference in favour of the Revenue and against the assessee.
(3.) Though the quantum of penalty is small, the question of law is of substantial importance, and covers an aspect which often arises for determination before the tax authorities and the High Courts.;