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Issues Involved:
1. Penalty for failure to furnish the return of income within the time allowed under section 139(1) of the Income-tax Act, 1961. 2. Penalty applicability when the return is filed within the time mentioned in a notice under section 148. 3. Penalty applicability when the return is filed before the assessment and within the period specified in section 139(4)(b). 4. Calculation of penalty on the net amount of tax payable after deducting advance tax and provisional tax. Detailed Analysis: Issue 1: Penalty for Failure to Furnish Return under Section 139(1) The court examined whether penalty under section 271(1)(a)(i) of the Income-tax Act, 1961, can be levied for failure to furnish the return within the time allowed under section 139(1). The assessee failed to file the return as required under section 139(1) and later filed it in response to a notice under section 148. The court held that the default of not filing the return under section 139(1) is independent and continues until the return is filed or the assessment is completed. The court emphasized that compliance with section 139(2) or section 148 does not extinguish the default under section 139(1). Therefore, penalty under section 271(1)(a)(i) is justified. Issue 2: Penalty Applicability When Return is Filed within Time Mentioned in Notice under Section 148 The court addressed whether penalty under section 271(1)(a)(i) can be levied when the return is filed within the time mentioned in a notice under section 148. The court held that the filing of a return under section 148 does not absolve the assessee from the default committed under section 139(1). The default under section 139(1) remains until the return is filed or the assessment is completed. Thus, penalty proceedings for the default under section 139(1) are valid even if the return is filed within the time prescribed in the notice under section 148. Issue 3: Penalty Applicability When Return is Filed Before Assessment and Within Period Specified in Section 139(4)(b) The court considered whether penalty under section 271(1)(a)(i) can be levied when the return is filed before the assessment and within the period specified in section 139(4)(b). The court held that the provisions of section 271(1)(a) are clear in penalizing the default of not filing the return within the time allowed under section 139(1). Filing a return under section 139(4) does not negate the default under section 139(1). Therefore, penalty under section 271(1)(a)(i) is applicable even if the return is filed before the assessment and within the period specified in section 139(4)(b). Issue 4: Calculation of Penalty on Net Amount of Tax Payable The court examined the Tribunal's decision to calculate the penalty on the net amount of tax payable after deducting advance tax and provisional tax. The Tribunal's order was partially upheld. The court clarified that as per the amended provisions of section 271(1), the penalty should be calculated on the "assessed tax," which is the tax reduced by the sum deducted at source or paid in advance, but not the provisional tax. Therefore, the Tribunal was justified in deducting advance tax but not provisional tax from the gross tax for penalty calculation. Conclusion: - Questions 1, 2, and 3: Answered in the affirmative and against the assessee. - Question 4: The Tribunal was justified in deducting advance tax but not provisional tax from the gross tax for penalty calculation. The parties were ordered to bear their own costs of the reference.
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