1976 (11) TMI 8 - HC - Income Tax

Summary

Issues:
1. Whether penalty under s. 271(1)(a) of the I.T. Act, 1961, could be imposed on the assessee for default in filing the return of income.
2. Whether the period of default for imposing the penalty under s. 271(1)(a) should start from the due date of filing the return of income under s. 139(1) of the Act.

Analysis:
Issue 1: The case involved a registered firm for the assessment year 1964-65 where the return of income was due by June 30, 1964, but was filed on October 27, 1965. The Income Tax Officer (ITO) initiated penalty proceedings under s. 271(1)(a) despite the return being filed before the completion of assessment. The Tribunal upheld the penalty, leading to a reference to the High Court. The court relied on previous judgments to affirm that penalty under s. 271(1)(a) could be imposed for default in filing the return of income, even if filed before assessment completion.

Issue 2: The second issue revolved around the starting point of the default period for imposing the penalty under s. 271(1)(a). The court disagreed with the Patna High Court's view that serving a notice under s. 139(2) during the assessment year precludes penalty under s. 271(1). The court held that the default under s. 139(1) triggers the penalty irrespective of a subsequent notice under s. 139(2). This aligns with the Rajasthan High Court's stance that an assessee cannot evade penalty by waiting for a notice under s. 139(2) to file the return. The Delhi and Andhra Pradesh High Courts also supported this interpretation, emphasizing the statutory obligation to file returns under s. 139(1) regardless of a notice under s. 139(2).

In conclusion, the High Court affirmed the imposition of the penalty under s. 271(1)(a) on the assessee for default in filing the return of income and clarified that the default period for penalty initiation starts from the due date under s. 139(1), irrespective of a subsequent notice under s. 139(2). The court's decision was supported by various High Court judgments and established legal principles.