1974 (2) TMI 8 - HC - Income Tax

Petitioner, a registered firm within the meaning of section 2(23) and Chapter XVI of the Income-tax Act, 1961, filed return for the assessment year 1964-65, on the 31st December, 1965. By an order dated February 26, 1967, the Income-tax Officer assessed the petitioner under section 143(3)/182(1) as a registered firm for a total income of Rs. 31,692 and charged interest for delay in filing return - When return is filed after the due date but before the assessment and is accepted whether penalty can be levied

Summary

Issues:
1. Imposition of penalty under section 271 of the Income-tax Act for failure to furnish return within the specified period.
2. Applicability of penalty considering the taxable limit for a registered firm.
3. Interpretation of sections 139(1), 271(1)(a)(i), and 139(4) of the Income-tax Act.

Analysis:
The petitioner, a registered firm, filed a return for the assessment year 1964-65, but was assessed by the Income-tax Officer for a higher income than declared, leading to a penalty for delay in filing the return. The petitioner challenged the penalty order under section 271 of the Act, arguing that since the Income-tax Officer had accepted the return and charged interest, no penalty should be imposed. However, the court held that the acceptance of the return does not preclude the imposition of a penalty for failure to file within the specified period under section 139(1) of the Act.

Regarding the contention that no penalty could be levied due to the taxable limit for a registered firm being Rs. 25,000 as per section 273(3)(a) of the Act, the court ruled against the petitioner. The court clarified that if the income assessed exceeds the taxable limit, in this case, Rs. 31,692, the penalty under section 271 can indeed be imposed, irrespective of the initial declared income.

Additionally, the petitioner argued that filing the return before assessment, as allowed under section 139(4) of the Act, should exempt them from penalty. However, the court emphasized that while section 139(4) permits late filing before assessment, it does not absolve the petitioner from the penalty provisions of section 271(1)(a) applicable for not adhering to the filing requirements of section 139(1).

In conclusion, the court dismissed all arguments raised by the petitioner's counsel, upholding the imposition of the penalty under section 271 of the Income-tax Act. The rule challenging the penalty order was discharged, with no costs awarded.