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HIGH COURT OF CALCUTTA
P. K. BANERJI
NARANDAS PARAMANAND DAS - Appellant
Versus
INCOME TAX OFFICER - Respondent
Matter 514 Of 1969
Decided On : FEBRUARY 07, 1972
INCOME TAX - Section 139 - Return of income - Extension of time - Penalty - Interest - Double jeopardy.
Fact of the Case:
The petitioner, a partnership firm, applied for registration but was denied. The petitioner appealed the denial, and the appeal was pending. For the assessment year 1963-64, the respondent assessed the petitioner's total income as a non-registered firm. The petitioner filed a return showing a lower income than the assessed amount. The petitioner was charged penal interest for not filing the return within the time allowed under Section 139(1) of the Income-tax Act, 1961. The petitioner also received a notice under Section 274 read with Section 271 of the Act for penalty proceedings for failing to file the return within the time allowed.
Finding of the Court:
The court held that the interest charged under Section 139 was not a penal interest but a liability under the statute itself. The court also held that the penalty proceeding under Section 271 was a separate proceeding from the assessment proceeding and could be initiated even if the assessee had filed a return before the assessment was completed. The court further held that the initiation of penalty proceedings under Section 271 did not amount to double jeopardy.
Issues: 1. Whether the interest charged under Section 139 was a penal interest or a liability under the statute itself? 2. Whether the penalty proceeding under Section 271 could be initiated even if the assessee had filed a return before the assessment was completed? 3. Whether the initiation of penalty proceedings under Section 271 amounted to double jeopardy?
Ratio Decidendi: 1. The court held that the interest charged under Section 139 was not a penal interest but a liability under the statute itself because it was a statutory liability for not filing the return within the time allowed by the Income-tax Officer. 2. The court held that the penalty proceeding under Section 271 could be initiated even if the assessee had filed a return before the assessment was completed because Section 271 only required that the assessee had failed to file the return within the time allowed by the Income-tax Officer. 3. The court held that the initiation of penalty proceedings under Section 271 did not amount to double jeopardy because the interest charged under Section 139 was not a penalty but a liability under the statute itself.
Final Decision: The court discharged the rule and vacated all interim orders. There was no order as to costs.
( 1 ) THIS rule is directed against a notice under Section 274 read with Section 271 of the Income-tax Act, calling upon the petitioner to show cause why an order imposing a penalty should not be made, for the petitioner without reasonable cause failed to furnish the return which the petitioner is required to furnish by a notice given under Section 22 (1)/22 (2)/34 of the Indian Income-tax Act, 1922, or which the petitioner is required to furnish under Section 139 (1) or by a notice given under Section 139 (2)/148 of the Income-tax Act, 1961, or have without reasonable cause failed to furnish it within the time allowed and in the manner required by the said Section 139 (1) or by another notice asking the petitioner why a penalty should not be imposed for failure to pay the advance tax as required under the law. The petitioner is a partnership firm. The petitioner applied for registration of the firm but it was not allowed. The petitioner appealed against the order of refusal to grant registration under the provisions of the Income-tax Act. The said appeal, it is alleged, is still pending. For the assessment year 1963-64, respondent No. 1 assessed the total income of the petitioner at a sum of Rs. 6,56,260 during the year as a non-registered firm. Thereafter, by a subsequent order under Section 154 of the said Act, respondent No. 1 rectified the original order of assessment and enhanced the figure of the total income from Rs. 6,56,260 to Rs. 6,66,760. The petitioner stated that the time for furnishing the return for the assessment year 1963-64 was 30th June, 1963. Thereafter, the petitioner made an application in the prescribed Form No. VI on 11th June, 1963, for extension of the said period to file the return but, it is alleged, that no communication was made to the petitioner allowing any extension. The petitioner, however, filed the return on 23rd May, 1967, showing an income of Rs. 1,17,217. 50. Thereafter, on 14th September, 1967, a revised return was filed showing an income of Rs. 38,208. 53. It is alleged that because of. the alleged default for not filing the return within the time, that is, before 31st December, 1963, the Income-tax Officer charged penal interest at the rate of 6% under Section 139 (1) (b) (iii) of the Act. The penal interest, it is alleged, charged amounted to Rs. 87,020. Thereafter, the original order of assessment for the said year was passed. The petitioner stated that the penal interest under the provision of Section 139 (1) (b) (iii) was charged on the petitioner for the defaulter-assessee not as a registered firm but on the hypothetical amount assessed on the income of the defaulter-assessee as it was an unregistered firm. Thereafter, the petitioner was served with a notice under Section 274 read with Section 271 of the Act for the penalty proceedings. Being aggrieved by the said notices, the petitioner moved this court and obtained the present rule.
( 2 ) AFFIDAVIT has been filed by the respondent stating inter alia, that the petitioner applied for extension of time to file the return after 30th September, 1969. Thereafter, no application was made. On the application by Form No. VI the petitioner was given extension till 30th September, 1964, as prayed for but no further time was asked for. The petitioner, it is alleged, became a defaulter within the meaning of Section 271 (1) (b) of the Act after 30th September, 1964. It is further alleged that the interest was charged, however, with effect from 1st January, 1964, from the petitioner on the assessed amount under the proviso to Section 139. It is further stated that the said amount of interest cannot be said to be a penal interest, but is only a liability under the statute itself. It is denied that the charging of interest under Section 215 and initiation of penalty proceedings under Section 273 of the Act will be a case of double jeopardy. In reply to the affidavit-in-opposition the petitioner reiterated the statement and
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