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TMI Blog1978 (12) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... f income under s. 139(1)(a) of the Act before June 30, 1969. A notice under s. 148 of the Act was served on the assessee on August 10, 1970, calling upon it to furnish a return before September 9, 1970. The return was belatedly filed on February 24, 1971. There was thus a delay of five complete months. The ITO, for the imposition of penalty, calculated the period of delay as being that of nineteen months commencing from June 30, 1969. The explanation for the delay given before the ITO was that the assessee had the impression that a cooperative society was not chargeable to income-tax. The delay after the service of the notice was tried to be explained on the ground that there had been transfer of an old accountant and the new accountant was unable to complete the return by the due date. Any of these grounds for escaping from the payment of the penalty did not find favour with the ITO. penalty of Rs. 12,668 was imposed. The AAC, by taking into consideration the payment of Rs. 21,130 made under s. 140A(1) of the Act by way of self-assessed tax, reduced the penalty to Rs. 4,638. At the time of hearing of the case before the Tribunal both the parties agreed that in view of the retrospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision on a new ground unless the party who would be affected thereby has had a sufficient opportunity of being heard on that ground. If the appellant can be allowed a concession of the nature contained in r. 11, there is no justification for denying the respondent in an appeal a similar concession. There is even an authority of the Bombay High Court in support of the view which we intend to take. It is reported as CIT v. Hazarimal Nagji Co. [1962] 46 ITR 1168. In it the respondent's right to support the AAC's order on a new ground is discussed. The law laid down in this authority with which we respectfully agree was summarised in the headnote as follows : " The powers of the Appellate Tribunal are similar to the powers of the appellate court under the Civil Procedure Code. In so far as a respondent only wants to maintain the decree of the lower court which is in his favour, he is entitled to support it on fresh grounds if he can do so, and the appellate court also will have jurisdiction to permit him to do so, provided that the fresh grounds which he wants to urge do not require further investigation into facts which are not already on record and are not based on facts whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, if any, payable by him, a sum equal to two per cent. of the assessed tax for every month during which the default continued. " The view taken by the Tribunal in respect of the period of default is only supported by an authority of the Patna High Court reported as Addl. CIT v. Bihar Textiles [1975] 100 ITR 253. The question referred for decision was whether the delay under s. 139(1) of the Act is condoned if a notice under s. 139(2) was issued to the assessee. This question was answered in favour of the assessee. It was remarked that once a notice under s. 139(2) is duly issued during the relevant assessment year there cannot be any penalty for failure to furnish the return as required by sub-s. (1) of s. 139 of the Act. This reasoning was adopted in the body of the judgment that once a notice under sub-s. (2) of s. 139 of the Act is issued that precludes the penal provision being attracted in so far as the failure to furnish the return under sub-s. (1) of s. 139 is concerned. One reason given for this view was that an ITO was empowered under s. 139(2) of the Act to issue notice even before the period prescribed under sub-s. (1) of s. 139 of the Act. When once it is held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payment of penalty cannot be so construed. We would now notice the authorities going against the view taken by the Patna High Court. The first such authority is C. V. Govindarajulu Iyer v. CIT [1948] 16 ITR 391 (Mad). There is a reference to the provisions of the Indian I.T. Act, 1922. It may be mentioned that s. 22 of the old Act corresponds to s. 139 of the Act. The holding of the authority is that the ITO was competent in the course of the proceedings taken by him under s. 34 read with s. 22(2) of the Indian I.T. Act, 1922, to assess such income, to levy a penalty under s. 28(1)(a) of that Act for failure without reasonable cause to furnish a return pursuant to a notice under s. 22(1). It was a case where an assessee failed to furnish a return of his total income as required by a notice under s. 22(1), but no notice under s. 22(2), was issued by the department within the year of assessment. Under the old Act, there used to be a general notice under s. 22(1) for the furnishing of returns by the assessee. This view was taken in the authority under discussion that once assessment proceedings have commenced they can come to an end only either by an order of assessment or by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined. The Tribunal took the view that so far as the time of commencement of the default is concerned, it was known and definite in the instant case. It was, however, not possible to determine the point of time when the default ceased in either of these two cases, for the simple reason that the default in these cases never ceased as none of the assessees had filed any return as required under section 139(1). We have to examine whether this reasoning is correct. The addition of the words 'as the case may be' at the end of s. 271(1)(a) of the Act presents us with no problem in interpretation. Under this section, the defaults contemplated are of four kinds : 1. Any person who without reasonable cause has failed to submit the return of total income which he was required to furnish under sub-section (1) of section 139 ; or 2. Any person who without reasonable cause has failed to furnish the return of total income which he was required to furnish by notice given under sub-section (2) of section 139 or section 148; or 3. Any person who without reasonable cause has failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139; or 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice is given to him under s. 139(2) and then file a return within the time mentioned in that notice. The third authority is of the Madras High Court, viz., R. Chandrasekharan v. CIT [1976] 104 ITR 454. The holding is that the levy of penalty under s. 271()(a) of the Act even with reference to a default, of not responding to the public notice under s. 22(1) of the 1922 Act was valid. It cannot be contended that in a case where notice for reassessment was issued penalty could be levied only with reference to the delay or default, if any, in pursuance of such a notice. If the assessee was unable for any reason to comply with the public notice under s. 22(1) he should have approached the authorities for extension. On his failure to do so he committed the default. The last authority to be considered is of the Gujarat High Court reported as S. Balaram v., CIT [1976] 105 ITR 674. This question was answered in the affirmative in this authority whether penalty could be legally leviable in reassessment proceedings for the original default of not filing the return. The holding would be further 'clear from the following headnote : " In reassessment proceedings under section 148 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PREM CHAND JAIN J.-I agree with the conclusion. December 4, 1978: C. S. TIWANA J.-After the pronouncement of judgment dated November 21, 1978, in Income-tax Reference No. 65 of 1975 (CIT v. Dehati co-operative Marketing-cum-Processing Society, we found that a clerical mistake had occurred therein. The two points on which the opinion was sought by the Tribunal were wrongly copied out in the judgment. They were the points which were proposed for decision. Subsequently, the Tribunal had modified the language of the questions which were actually referred to this court for opinion. There is, however, no consequential mistake in the judgment itself. We thus under the inherent powers of this court order the following questions mentioned in the judgment to be deleted : " (1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in allowing the assessee to raise a new ground of attack against order of the Income-tax Officer (for the first time) in the appeal filed by the revenue against the set-off of tax paid under section 140A(1) of the Act? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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