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TMI Blog1971 (12) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1961, hereinafter called " the Act ", made at the instance of the assessee and it relates to the assessment year 1964-65. The questions of law referred for the opinion of this court by the Income-tax Appellate Tribunal are : "1. Whether, when the due date for compliance with the notice under section 139(2) of the Income-tax Act, 1961, falls within the due date for compliance with the provisions of section 139(1) of the Income-tax Act,, 1961, the notice issued under section 139(2) is illegal ? 2. Whether, on the facts and in the circumstances of the case, non-compliance with the provisions of section 139(2) of the Income-tax Act, 1961, constitutes sufficient cause for exoneration from levy of penalty under section 271(1)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for extension of time till 30th August, 1964. The extension prayed for was granted in both cases. But the assessee did not submit their returns, nor did they ask for further extension of time. Returns were filed on 21st December, 1964. Thereafter, assessments were made on the firm as well as on its partners. The partner, S.Venkatasubbaiah Raju, had no separate income apart from his share of the income from the assessee-firm. Proceedings were taken under section 271(1)(a) of the Act for levy of penalty on the assessee-firm as well as its partner, Venkatasubbaiah Raju. A sum of Rs. 1,895 was levied as penalty on the firm and Rs. 71 was levied as penalty on the partner, Venkatasubbaiah Raju. The contention of the assessee before the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period prescribed by sub-section (1) is over. The two sub-sections in fact deal with two distinct and different aspects of the procedure for submitting returns : sub-section (1) imposes an obligation on all persons whose income is assessable to tax to furnish a return within a certain specified time without being asked to do so; while sub-section (2) confers a power on the income-tax authorities to demand a return at any time before the expiry of the assessment year. We find no incompatibility or repugnance between these two provisions and we see no reason why both of them should not operate simultaneously to their full extent. Reading the two sub-sections harmoniously together, we are of opinion that the intention of the section is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. The two sub-sections are intended to serve different purposes. As held by the Allahabad High Court in the above referred decision, the time allowed under sub-section (1) is available to every person liable to assessment provided he has not already been asked by the Income-tax Officer to furnish a return by means of a notice under sub-section (2). We are in respectful agreement with the view taken in Tarzan Hosiery Private Ltd.'s case by the Allahabad High Court. Accordingly, question No. 1 has to be answered in the negative and against the assessees. On the second question, the explanation offered by the assessee-firm was that the audit of the accounts for the relevant year was not completed till the end of November, 1964, and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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