Judgment

PATHAK, J.:- These appeals by special leave are directed against the judgment of the High Court of Andhra Pradesh disposing of a reference under sub-s. (1) of S. 256 of the Income-tax Act, 1961 on the following questions of law :

1. Whether on the facts and in the circumstances of the case. the Appellate Tribunal was justified in concluding that the charging of interest indicated that the Income-tax Officer was satisfied that there was sufficient cause for delay in filing the return of income?

2.Whether on the facts and in the circumstances of the case. the Tribunal was justified in cancelling the penalties levied under S. 271(1)(a)?

2. The respondent assessee is a partner in the firm. M/s Manik Rao & Brothers. He filed voluntary returns for the assessment years 1959-60. 1460-61. 1961-62 and 1962-63. all on August 2. 1963. The return for the assessment year 1963-64 was filed on August 2, 1984. On account of the delay in filing the returns the Income Tax Officer treated the assessee as being in default and imposed penalties under cl.(a) of Sub-s.(1) of S. 271 of the Act. In appeal before the Appellate Assistant Commissioner of Income Tax the assessee contended that as the returns had been furnished before the end of four years from the end of the relevant assessment years. that is to say the period prescribed by Sub-s.(4) of S . 139 of the Act, he was not liable to any penalty. It was also pointed out by the assessee that interest had been levied under clause (iii) of the proviso to Sub-s(1) of S. 139 and, therefore, no question arose of imposing a penalty. Both contentions were rejected by the Appellate Assistant Commissioner. In second appeal before the. Income Tax Appellate Tribunal the assessee raised substantially the same contentions. The Appellate Tribunal took the view that in cases falling under Sub-s. (1). Sub-s. (2) and Sub-s. (4) of S. 139 the Income Tax Officer was empowered to grant time for filing a return and on such time being granted the assessee would be liable to pay interest. It pointed out that the assessee had in fact given his reasons for the delay in filing the returns "both for the purpose of levy of interest under cl. (1) of S. 139 and also the levy of penalty under cl. (a) of Sub-s. ( 1) of S. 271." It held that as the Income Tax Officer had levied interest up to the date of the filing of the returns it must be presumed that the Income Tax Officer had extended the time for filing the returns after satisfying himself that it was a case for extension of time. The presumption was founded in the principle that an officer entrusted with a judicial or quasi-judicial duty must be presumed to have discharged his duties in a proper and bona fide manner. The Appellate Tribunal allowed the appeals and cancelled the penalties.

3. At the instance of the Commissioner of Income Tax. the Appellate Tribunal made a reference to the High Court of Andhra Pradesh. The High Court held that the Appellate Tribunal was justified in relying upon the presumption that official acts had been regularly performed. and that therefore it must be presumed that the Income Tax Officer had extended the time upon grounds made out by the assessee because otherwise the Income Tax Officer could not have charged interest. Holding that no penalty was leviable in the circumstances the Tribunal answered the reference in favour of the assessee.

4. To appreciate the true scope of the questions referred. it is necessary to understand the scheme enacted in S. 139 of the Income-tax Act, 1961. Broadly, the scheme envisages a voluntary return by the assessee under Sub-s. (1) of S. 139, a return consequent upon a notice by the Income Tax Officer under Sub-s. (2) of S. 139 and a return in the circumstances mentioned in Sub-s. (4) of S. 139. We are not concerned here with a return under Sub-s. (3) of S. 139 disclosing a loss nor are we concerned with a revised return under Sub-s. (5) of S. 139. In the case of a voluntary return, Sub-s. (1) of S. 139 p