Prabha Shanker Mishra, J.

1. At the instance of the assessee, M/s Jamunadas Mannalal, a registered firm, at Jhumritelaiya in the district of Hazaribagh, Income-tax Appellate Tribunal, "B" Bench, Patna, has referred to this court the following questions of law for opinion :

"(1) Whether penalty under Sec.271(1)(a) could be imposed even after charging interest under Sec.139 for delayed submission of return ?

(2) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had forfeited his rights to impose penalty under sec. 271(1)(a) by not completing the assessment under Sec.143(3) ?

(3) Whether, on the facts of the case, a penalty of Rs. 8,680 calculated on the basis of tax as on unregistered firm could be levied in this case when no tax was payable by it as a registered firm ? "

2. Assessment years involved are 1965-66 and 1966-67. There being separate penalty orders for the two years and separate appeals by the assessee before the AAC, Ranchi Range, Ranchi, and the Income-tax Appellate Tribunal, "B" Bench, Patna, and two references, although by a common order, have been made by the Tribunal, in this court also the references in question have been registered as two taxation cases, one for the assessment year 1965-66 and the other for the assessment year 1966-67. A Bench of this court consisting of S.K. Jha and A.K. Sinha JJ. heard the matter and on March 31, 1983, noticed that on the question as to what should be the period for which there can be said to be a default for levying penalty in terms of Sec.271(1)(a) of the I.T. Act, 1961, the two Hon ble Judges of this court, namely, S.P. Sinha J. (as he then was) and S. Sarwar Ali J. were in disagreement in the case of Addl. CIT V/s. Dongarsidas Biharilal [1979] 116 ITR 897. They, accordingly, thought it desirable that the matter should be heard by a Full Bench for an authoritative exposition of law.

3. Admitted facts, inter alia, are as follows : The assessee is a registered firm. As provided under Sec.139(1)(a) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), it could file its return of income by June 30, 1965, for the assessment year 1965-66, but it failed to do so. Similarly, for the assessment year 1966-67, its return of income was due on June 30, 1966. It did not, however file the return within time. The assessee was given a notice by the ITO concerned as provided under Sub-section (2) of Sec.139 of the Act to furnish a return of its income for the assessment year 1965-66. The assessee did not respond to this notice. The assessee submitted a return for the assessment year 1965-66 on October 17, 1966, and for the assessment, year 1966-67 on August 28, 1968, under Sec.139(4) of the Act. Penalty proceedings were initiated for not filing the return of income by the due date under Sec.139(1) of the Act and notices were issued under Sec.274/271(1)(a) of the Act which were duly served on the assessee. The ITO concluded that the assessee failed to submit its return of income for these two years by the due date and delayed the filing of return without reasonable cause. He, accordingly, imposed a penalty of Rs. 8,310 being two per cent, of the tax assessed as on unregistered firm for every month of default for the assessment year 1965-66 and Rs. 8,680 being two per cent, of the assessed tax as on unregistered firm for the assessment year 1966-67, after deducting the advance tax already paid, for every month during which the default continued. The assessee preferred appeals before the AAC, Ranchi Range, Ranchi, and its appeals having been dismissed by the AAC, it appealed before the Appellate Tribunal. The Appellate Tribunal also found no merit in the appeals as to the question that no liability to pay penalty existed but it found force in the arguments of the assessees counsel that in determining the quantum of penalty, payments of advance taxes should have been considered. It, accordingly, directed the ITO to re-compute the penalties afte