1984 (8) TMI 63 - HC - Income Tax

Summary

Issues:
1. Imposition of penalty under section 271(1)(a) for default of notice under section 139(2) of the Income Tax Act, 1961.
2. Justification of sustaining penalty for delayed submission of return under section 139(1) of the Act.

Analysis:
The case involved the imposition of a penalty of Rs. 3,150 under section 271(1)(a) of the Income Tax Act, 1961, for default in submitting a return for the assessment year 1967-68. The Income Tax Officer (ITO) imposed the penalty despite no notice under section 139(2) being served on the assessee. The assessee contended that since no notice was served, the penalty was unjustified. The Appellate Assistant Commissioner (AAC) confirmed the penalty, stating that the assessee was indeed a defaulter. The Tribunal upheld the AAC's decision, emphasizing that the ITO had the authority to impose the penalty under section 139(1) even if there was no notice under section 139(2) served.

The Tribunal's decision was based on the understanding that the default under section 139(1) continues regardless of whether a notice under section 139(2) is served. The Tribunal held that the penalty was rightly imposed for the period of default falling under section 139(1) of the Act. The Tribunal referred to various High Court decisions supporting the imposition of penalties for failure to submit returns under section 139(1), even if a return is subsequently filed in response to a notice under section 139(2) and an assessment is conducted based on that return.

The Court concurred with the Tribunal's decision, affirming that the penalty was justified under section 139(1) of the Act, despite no notice under section 139(2) being served. The Court answered both questions in the affirmative, ruling in favor of the Revenue and against the assessee. However, considering the circumstances, each party was directed to bear their own costs. Judge S. K. Jha agreed with the judgment.

In conclusion, the case highlighted the significance of understanding the provisions of the Income Tax Act regarding default in submitting returns and the authority of the ITO to impose penalties under different sections based on the nature of the default. The judgment underscored the continuity of default under section 139(1) irrespective of the service of a notice under section 139(2), leading to the validation of the imposed penalty in this particular case.