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TMI Blog1978 (12) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... the AAC, the assessee took up the matter in further appeal to the Tribunal, and before the Tribunal the assessee contended that once the ITO issued a notice under s. 139(2) of the Act and the assessee had filed the return in response to that notice, no penalty could be levied against the assesee under s. 139(1), because after the filing of the return pursuant to the notice issued under s. 139(2) of the Act, there is no default on the part of the assessee. The Tribunal rejected the said contention of the assessee and dismissed the appeal. Subsequently, the assessee applied, under s. 256(1) of the Act, for a reference of the following question for the opinion of this court and the Tribunal has referred the same : " Whether, on the facts, and in the circumstances of the case, the Tribunal was right in holding that the default under section 139(1) was independent of section 139(2) of the Income-tax Act, 1961, and the same survived after the applicant had complied with a notice under section 139(2) of the Act ? " We shall first refer to the relevant statutory provisions and express our view on the construction of those statutory provisions and thereafter examine the decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (b) of section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm, and (b) in any other case, on the amount of tax payable on the total income reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be." Section 139(2) of the Act is as follows : " In the case of any person who, in the Income-tax Officer's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Income-tax Officer may, before the end of the relevant assessment year, serve a notice upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided that on an application made in the prescribed manner the Income-tax Officer may, in his discretion, extend the date for the furnishing of the return, and when the date for furnishing the return, whether fixed originally or on extension, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill the ITO takes some action ; the second is the failure to furnish the return within the time prescribed by that section. Similarly, sub-s. (2) of s. 139 again contemplates two defaults ; one is the failure to furnish a return in response to the notice issued by the ITO and the second is the failure to furnish the return within thirty days from the date of service of the notice issued by the ITO as contemplated by s. 139(2). The language of s. 148 has equated the notice issued under that section to the notice issued under s. 139(2). Consequently, the combined effect of ss. 139(1), 139(2) and 148(1) is to enact the following defaults : (i) failure to furnish a return as contemplated by s. 139(1) ; (ii) failure to furnish a return within the time prescribed by s. 139(1) ; (iii) failure to furnish a return in response to a notice under s. 139(2) or s. 148 ; and (iv) failure to furnish a return within thirty days from the date of service of the notice issued under s. 139(2) or s. 148. All these four defaults are expressly comprehended by s. 271(1)(a). Thus, on a consideration of the statutory provisions, it will be clear that the default committed under s. 139(1) is ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Courts taking a contrary view. The Rajasthan High Court had occasion to consider the identical question in CIT v. Indra and Co. [1971] 79 ITR 702. While disagreeing with the view taken by the Income-tax Appellate Tribunal, the Bench observed (p. 706) : " If the view taken by the Tribunal is adopted the result will be that if a person has not filed any return under section 139(1), he cannot be penalised if he has filed a return after a notice has been given under sub-section (2) of section 139. It may be pointed out that before taking any assessment proceedings, it is incumbent on the Income-tax Officer to issue notice under sub-section (2) of section 139. Such a view would mean that any person liable to pay income-tax may sit comfortably without any fear of the imposition of penalty and not furnish his return as required under section 139(1) and wait till a notice is given to him under section 139(2) and then file a return within the time mentioned in that notice. This view does not appeal to us. An argument has been addressed to us that as soon as a notice is issued under sub-section (2) of section 139 giving time for furnishing the return, it must be taken that the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he G.T. Act, 1958, took the same view and followed the decision of the Rajasthan High Court referred to above in Shiv Shankar Lal v. CGT [1974] 94 ITR 269 (Delhi). The Andhra Pradesh High Court had to consider this question in Mullapudi Venkatarayudu v. Union of India [1975] 99 ITR 448. In that decision a Bench of the Andhra Pradesh High Court took the same view as indicated above and pointed out that the view they had taken was supported by the decision of the Rajasthan High Court, to which we have already made a reference. The same is the view taken by the Gujarat High Court in S. Balaram v. CIT [1976] 105 ITR 674. As we have indicated sufficiently, the obligation imposed by s. 139(1) is the obligation to file a return of the income voluntarily within the time prescribed therein while s. 139(2) enables the ITO to issue a notice before the end of the relevant assessment year, requiring an assessee to furnish his return of income. Simply because the ITO has exercised the power conferred upon him under s. 139(2) and in response to the notice issued by him and served on the assessee, the assessee has filed a return, the default committed by the assessee under s.139(1) of the Act is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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