IMPORTANT POINT
Penalty in terms of Section 271(1)(a) of Income Tax Act could be levied when return was filed u/s 139(4) of the Act.

Headnote:Income Tax Act, 1961—Section 271(1)(a) and 139—Order imposing penalty passed by Inspecting Assistant Commissioner of Income Tax—Writ challenging the order allowed by Single Judge holding that imposition of penalty was without jurisdiction in view that interest had been paid for late filing of returns and that Inspecting Assistant Commissioner had no jurisdiction to impose penalty and only Income Tax Officer was competent to impose penalty—Division Bench set aside judgment in appeal—Appeal—Appellant had not filed return either within time specified in statute or within extended period of time—Interest and penalty were two different and distinct concepts, penalty being punishment on wrong doer—Return in the case had been filed u/s 139(4) of the Act—Penalty could be levied u/s 271(1)(a) of the Act—No ground to interfere.
       Held : Admittedly, the appellant did not file the return either within the time specified in the statute for doing so or within the extended period of time. The returns were filed beyond the extended period for filing the return. Interest on the amount due and penalty are two different and distinct concepts. Interest is the accretion on the capital whereas the penalty is a punishment imposed on a wrong-doer.(Para 8)
       In the present case, as mentioned above, the return was filed under sub-section (4) of Section 139 of the Act. The question is whether penalty under Section 271(1)(a) could be levied on a return filed under Section 139(4) fell for consideration before this Court in Pradip Lamps Works Vs. Commissioner of Income Tax, 2001 (249) ITR 797. The question posed in that case was as under:
       Question No. 2:
       "Whether, on the facts and the circumstances of the case, the Tribunal was right in holding that notwithstanding that the return of Income had been filed on February 6, 1961, i.e., within the period permissible under Section 139(4) of the Income Tax Act, 1961, the imposition of a penalty was justified as there was a delay for the purpose of section 271(1)(a) of the Income Tax Act, 1961?"
       It was answered in the following terms:
       "So far as the second question is concerned, the only submission is that since the assessee was entitled to and did file his return before making the assessment, no penalty should be levied under Section 271(1)(a), even though the return was filed beyond the prescribed date. We do not think that this contention is sustainable in law. Merely because, sub-section (4) of Section 139 enables the assessee to file his return at any time before the assessment is made, it does not mean that his liability to pay penalty under Section 271(1)(a) is erased. We affirm the opinion of the High Court on this question as well."
       We respectfully follow the law laid down in Pradip Lamps Workss case (supra). There are number of High Courts who have taken the same view.
       We hold that the penalty could be levied in the present case under Section 271(1)(a) of the Act. (Paras 10 and 11)

JUDGMENT

Bhan, J.—This appeal is directed against the order dated 28th September, 2000 passed by a Division Bench of the High Court of Calcutta in FMA No. 1160 of 1990 whereby the Division Bench has set aside the order passed by the Single Judge of the same High Court and dismissed the writ petition filed by the writ petitioner-appellant.

2. Brief facts giving rise to file the present appeal by special leave are as follows:

The appellant filed a writ petition in the High Court, inter alia, seeking an appropriate writ, order or directions and/or to withdraw the order dated 26th September, 1974 passed by the Commission of Income Tax, Central and the orders of assessment and penalty proceeding under Section 271 (1)(a) of the Income Tax Act, 1961 (for short "the Act") and the demand notice issued under Section 156 of the Act and also the order dated 7th of October, 1974 imposing penalty.

3. The learned Single Judge before whom the writ petition came up for hearing allowed the writ petition and held that the penalty imposed by the Authorities was not in accordance with law and consequently the order imposing penalty and demand notice for realization of penalty for the assessment years 1959-60 to 1965-66 was quashed.

4. The learned Single Judge allowed the writ petition on the grounds (a) that the imposition of penalty was without jurisdiction in view of the fact that interest had been paid for late filing of the returns for the aforesaid years; and (b) that the penalty under Section 271 (1)(a) of the act could not be imposed by the Inspecting Assistant Commissioner of Income Tax as he had no jurisdiction to do so and, only the Income tax Officer was competent to impose penalty as per provisions of Section 271 (1)(a) of the Act.

5. During the course of arguments, counsel appearing for the respondent-assessee before the Division Bench of the High Court, the appellant herein, did not dispute the jurisdiction of the Inspecting Assistant Commissioner of the Income Tax to impose the penalty for not filing the returns within the extended period. The Division Bench recorded the following findings:

"...However, before us the learned advocate for the writ petitioner/respondent did not question of jurisdiction of the Inspecting Assistant Commissioner of the Income Tax to impose penalty on the writ petitioner for not filing the return within the extended time, that was granted by the concerned authority..."

On the afore-mentioned first point, the Division Bench came to the conclusion that mere deposit of interest would not absolve the assessee from its liability to pay the penalty under Section 271 (1)(a) of the Act. To appreciate the contention it is necessary to understand the scheme enacted in Section 139 of the Act, as it stood at the relevant time. Broadly, the scheme envisages a voluntary rturn by the assessee under sub-section (1) of Section 139, a return consequent upon a notice by the ITO under under sub-section (2) of Section 139 and a return in the circumstances mentioned in under sub-section (4) of Section 139. We are not concerned with the return filed under sub-section (1) or (3) of Section 139. We are concerned with the situation where the return has been filed under Section 139 (4) of the Act which at the relevant time read as under:

"(4) (a) Any person who has not furnished a return within the time allowed to him under sub-section (1) or sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of sub-section (8) shall apply in every such case.

(b) The period referred to in clause (a) shall be–

(i)where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year;

(ii)where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end o

Click Here to Read the rest of this document

2006 Supreme(SC) 809

IMPORTANT POINTPenalty in terms of Section 271(1)(a) of Income Tax Act could be levied when return was filed u/s 139(4) of the Act.

Cases Referred (1)

IMPORTANT POINT
Penalty in terms of Section 271(1)(a) of Income Tax Act could be levied when return was filed u/s 139(4) of the Act.