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Issues:
1. Interpretation of penalty for late filing of return under section 271(1)(a) of the Income-tax Act, 1961. 2. Effect of amendment to section 139 of the Act on the levy of interest for late filing of return. 3. Applicability of amended provisions to the assessment year 1973-74. 4. Judicial interpretation of the automatic levy of interest under section 139(8) post-amendment. 5. Justification of canceling the penalty based on the levy of interest under section 139(8). Analysis: 1. The case involved a question of law regarding the remittance of penalty for late filing of a return under section 271(1)(a) of the Income-tax Act, 1961. The Tribunal had to determine whether the penalty levied by the Income-tax Officer was justified, considering the delay in filing the return beyond the due date specified under section 139 of the Act. 2. The Tribunal, in its order dated July 18, 1985, relied on the Supreme Court decision in CIT v. M. Chandra Sekhar [1985] 151 ITR 433, which interpreted the provisions of section 139(8) regarding the levy of interest for late filing of the return. The Tribunal held that since interest was already levied under section 139(8), the return was deemed to have been filed within the extended time allowed by the Income-tax Officer, and thus no penalty under section 271(1)(a) could be imposed. 3. The counsel for the Revenue contended that the Tribunal overlooked the amendment made to section 139 of the Act under the Taxation Laws (Amendment) Act, 1970, which made the levy of interest automatic for late filing of returns. The counsel argued that the Tribunal should have considered the amended provisions applicable to the assessment year 1973-74, as supported by decisions of the Patna High Court and the Madras High Court. 4. The High Court agreed with the Revenue's contention, noting that the amendment to section 139(8) made the levy of interest automatic upon late filing of the return, removing the Assessing Officer's discretion in the matter. The court emphasized that the Tribunal erred in canceling the penalty solely based on the levy of interest under section 139(8) and held in favor of the Revenue, directing the Tribunal to reconsider other questions raised in the case. 5. The judgment highlighted the importance of considering the amended provisions of the law and the automatic nature of interest levy under section 139(8) post-amendment. It clarified that the Tribunal's decision to cancel the penalty based on the levy of interest was not justified, emphasizing the need for a fresh consideration of the case by the Tribunal to address other raised issues comprehensively.
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