1975 (11) TMI 37 - HC - Income Tax

Summary

Issues:
1. Imposition of penalty under section 271(1)(a) for failure to file the return in time after imposing penal interest under section 139(1)(iii) of the Income-tax Act, 1961.
2. Legality of imposing two penalties for the same offence of delay in filing the return of income under section 139(1)(iii) of the Income-tax Act, 1961.

Analysis:
The High Court of Kerala addressed two key issues in this judgment under the Income-tax Act, 1961. The first issue involved the imposition of a penalty under section 271(1)(a) for failing to file the return on time after penal interest was already imposed under section 139(1)(iii). The court examined the timeline of events involving a partnership concern's failure to file the return before the extended deadline, leading to the initiation of penalty proceedings by the Income-tax Officer. The court upheld the imposition of penalty, emphasizing that it was not considered as a double penalty but rather a compensatory measure for the delay in filing the return, distinct from the interest charged under section 139(1)(iii).

Regarding the second issue, the court deliberated on the legality of imposing two penalties for the same offence of delayed filing of the return of income under section 139(1)(iii). The court highlighted the distinction between the compensatory nature of interest charged under section 139 and the punitive character of penalties under section 271. It was clarified that the penalty was not for the mere act of non-compliance but for the attempted evasion of tax, making it a deterrent measure. The court cited previous judgments to support the view that the levy of penalty and interest for delayed submission of the return did not contravene any constitutional provisions and were distinct proceedings under different sections of the Income-tax Act.

In conclusion, the High Court answered the first question in favor of the department and against the assessee, upholding the imposition of the penalty under section 271(1)(a). As a result, the second question did not require an answer based on the court's decision on the first issue. The judgment highlighted the complementary nature of compensatory interest and punitive penalties, emphasizing the distinct legal basis for each under the relevant sections of the Income-tax Act.