The payment of interest under section 139(8) of the Income-tax Act, 1961, till the date of filing the return raises a presumption that the time for filing the return was deemed to have been extended under proviso (iii) to section 139(1), and therefore, the penalty provisions under section 271(1)(a) do not come into play.

JUDGMENT :

B.K. Mehta, J.

The following question is referred to us at the instance of the assessee for our opinion under section 256(1) of the Income-tax Act, 1961 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law '.in holding that the penalty under section 271(1)(a) of the Income-tax Act, 1961, was rightly imposed on the registered firm even when it had paid excess advance tax?"

2. A few facts need be noticed in order to appreciate the dispute between the assessee and the Revenue in this reference. The assessment year under reference is 1968-69 and the assessee was required to file a return of income by June 30, 1968. The said return was filed on November 10, 1970, though in the statement of the case, it has been stated to be November 10, 1971. However, having regard to the date of the order of assessment wherein the correct date has been stated, we have, with the consent of the parties, taken this date of filing the return as November 10, 1970. The assessee returned an income of Rs. 51,759. It is common ground that the assessee had paid interest under section 139(8) till the date of filing of the return. However, in view of the delay in filing the return, the Income-tax Officer initiated action for levy of penalty under section 271(1)(a) of the said Act. In reply to the show-cause notice issued by the Income-tax Officer, the assessee contended that the firm of which he was a partner was a registered firm which had already paid advance tax, and the assessment has resulted in the refund, and as such there was no default or for that matter any contumacious conduct. This plea of the assessee did not commend itself to the Income-tax Officer, who imposed a penalty of Rs. 9,000.

3. In appeal to the Appellate Assistant Commissioner, the same contention was reiterated on behalf of the assessee, who accepted the appeal and cancelled the order of penalty. The Income-tax Officer carried the matter in appeal before the Tribunal which was of the opinion that the question was no more res integra, and having regard to the decision of this court in CIT v. Damjibhai and Brothers (Income-tax Reference No. 44 of 1974, decided on September 22/23, 1975), the penalty was rightly imposed by the Income-tax Officer. The appeal of the Department was allowed and the order of the penalty was restored. It is in these circumstances that the assessee has prayed for a reference which has been granted.

4. At the time of hearing of this reference, two contentions were urge by the learned advocate for the assessee. In the first place, he submitted that the Tribunal was clearly in error in law inasmuch as it has proceeded on a short ground that the question is covered by the decision of this court in Damjibhai and Brothers' case, which was not a case of payment of advance tax by the said firm and it was a case of tax to be paid on the self-assessment by the assessee. In the second place, the learned advocate urged that having regard to the latest decision of the Supreme Court in CIT v. M. Chandra Sekhar (1985) 151 ITR 433, there is a legal presumption that the time for filing the return was deemed to have been extended on the payment of the interest under proviso to sub-section (1) of section 139 and, therefore, there was no question of any delay in filing the return and the condition precedent for invoking the power to levy penalty under section 271(1)(a) was not satisfied and, therefore, also the Tribunal has committed an error of law.

5. We are of the opinion that this reference should be allowed obviously on the second contention which has been urged. As stated above, it is not in dispute between the parties that the assessee was charged penal interest for the Period up to the date of filing of the return. In M. Chandra Sekhar's case (1985) 151 ITR 433 (SC), the facts were that the assessee-respondent had filed voluntary returns of income for the assessment years 1959-60 to 1962-63 on August 2, 1963, and that for the