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TMI Blog1984 (12) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court approved of the approach adopted by the Appellate Tribunal and did not find it contrary to law. We do not see any reason to differ from the opinion expressed by the High Court. Levy of penalty - Failure to file return within time allowed - reasonable cause for failure - HELD THAT: - Since interest under s. 139(1) has been levied by ITO, it must be presumed that ITO has granted extension of time to file return on the grounds made out by the assessee - hence penalty provision of s. 271(1)(a) does not come into play at all. - Judge(s) : R. S. PATHAK. and V. D. TULZAPURKAR. JUDGMENT The judgment of the court was delivered by PATHAK J.- These appeals by special leave are directed against the judgment of the High Court of Andhra Pradesh disposing of a reference under sub-s. (1) of s. 256 of the I.T. Act, 1961, on the following questions of law : 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in concluding that the charging of interest indicated that the Income-tax Officer was satisfied that there was sufficient cause for delay in filing the return of income ? 2. Whether, on the facts and in the circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, it must be presumed that the ITO had extended the time upon grounds made out by the assessee, because otherwise the ITO could not have charged interest. Holding that no penalty was leviable in the circumstances, the High Court answered the reference in favour of the assessee. To appreciate the true scope of the questions referred, it is necessary to understand the scheme enacted in s. 139 of the I.T. Act, 1961. Broadly, the scheme envisages a voluntary return by the assessee under sub-s. (1) of s. 139, a return consequent upon a notice by the ITO under sub-s. (2) of s. 139 and a return in the circumstances mentioned in sub-s. (4) of s. 139. We are not concerned here with a return under sub-s. (3) of s. 139 disclosing a loss nor are we concerned with a revised return under subs. (5) of s. 139. In the case of a voluntary return, sub-s. (1) of s. 139 prescribes the period within which such returns must be filed. Where no return can be filed within the prescribed period, the assessee is entitled to apply to the ITO for extending the date for furnishing the return. The ITO is empowered to extend the date in his discretion. In a case covered by cl. (i) of the proviso to sub-s. (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose and extending the date for furnishing the return. At the relevant time, the proviso to sub-s. (1) of s. 139 read: Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return (i) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired on or before the 31st day of December of the year immediately preceding the assessment year, and in the case of any person referred to in clause (b), up to a period not extending beyond the 30th day of September of the assessment year without charging any interest; (ii) in the case of any person whose total income includes any income from business or profession the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at nine per cent. per annum shall be payable from the 1st day of October or the 1st day of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO acted arbitrarily and contrary to the procedure envisaged by the statute. The Appellate Tribunal considered the matter carefully and found circumstances on the record in favour of raising the presumption. The High Court approved of the approach adopted by the Appellate Tribunal and did not find it contrary to law. We do not see any reason to differ from the opinion expressed by the High Court. In the instant case, the extension was a matter falling within subs. (1) of s. 139, and the returns furnished by the assessee must be attributed to that provision. They were not returns furnished within the contemplation of sub-s. (4) of s. 139. Therefore, the decision of the Gujarat High Court in Addl. CIT v. Santosh Industries [1974] 93 ITR 563, of the Karnataka High Court in Nagappa v. ITO [1975] 99 ITR 32, of the Andhra Pradesh High Court in Poorna Biscuit Factory v. CIT [1975] 99 ITR 41, of the Orissa High Court in CIT v. Gangaram Chapolia [1976] 103 ITR 613 [FB] and of the Allahabad High Court in Metal India Products v. CIT [1978] 113 ITR 830 [FB], cannot be invoked in the instant case. They are cases dealing with a return filed in the circumstances mentioned in sub. s. (4) of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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