1972 (8) TMI 40 - HC - Income Tax

Interpretation of section 271(1)(a) of the Income-tax Act, 1961 - return was filed within four years from the end of the assessment year but before the assessment was completed - Whether penalty under section 271(1)(a) can be levied

Summary

Issues Involved:
1. Interpretation of Section 271(1)(a) of the Income-tax Act, 1961.
2. Applicability of Section 139(4) in relation to Section 271(1)(a).
3. Whether filing a return under Section 139(4) absolves the assessee from penalty under Section 271(1)(a).

Issue-Wise Detailed Analysis:

1. Interpretation of Section 271(1)(a) of the Income-tax Act, 1961:
The primary issue in this case revolves around the interpretation of Section 271(1)(a) of the Income-tax Act, 1961. This section deals with the imposition of penalties for failure to furnish a return of income within the time allowed under Section 139(1). The court noted that Section 271(1)(a) consists of two clauses: the first clause applies to cases where no return is filed at all, while the second clause applies to cases where the return is filed late, i.e., not within the time allowed under Section 139(1).

2. Applicability of Section 139(4) in relation to Section 271(1)(a):
The court examined whether Section 139(4), which allows an assessee to file a return within four years from the end of the assessment year, could be considered an extension of the time allowed under Section 139(1). The assessee argued that filing a return under Section 139(4) should be deemed as filing within the time allowed under Section 139(1). However, the court rejected this argument, stating that the words "within the time allowed...by sub-section (1) of section 139" in Section 271(1)(a) refer to the time specified in Section 139(1) or extended by the Income-tax Officer under the proviso to that sub-section, and not to the time allowed under Section 139(4).

3. Whether filing a return under Section 139(4) absolves the assessee from penalty under Section 271(1)(a):
The court held that filing a return under Section 139(4) does not absolve the assessee from the penalty under Section 271(1)(a). The court emphasized that Section 139(4) provides an opportunity for the assessee to file a return before the assessment is made, but it does not wipe out the default committed by not filing within the time allowed under Section 139(1). The court noted that the legislature could have explicitly stated that filing a return within four years would absolve the assessee from penalty, but it did not do so. Therefore, the assessee remains liable for the penalty for failing to file the return within the time allowed under Section 139(1).

Conclusion:
The court concluded that the view taken by the Tribunal was incorrect. Filing a return under Section 139(4) does not absolve the assessee from the penalty under Section 271(1)(a) for failing to furnish the return within the time allowed under Section 139(1). The court answered the question referred to it in the negative and ruled that the assessee would pay the costs of the reference to the Commissioner.