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TMI Blog1978 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, while proceeding with the assessment, gave a notice under s. 271(1)(a) of the Act as to why penalty should not be imposed under that section for having committed default in filing the return as contemplated under s. 139(1). The ITO then imposed penalty at the rate of 2 per cent. per month and held that there was a default of 32 months and, therefore, imposed penalty of Rs. 6,250. The AAC on appeal modified the order because in the assessment appeal the income was reduced. On further appeal before the Tribunal, the Tribunal found that the penalty imposed against the assessee was for having committed default in filing the return under s. 139(1) and no proceedings had been launched against him for any default in filing the return under s. 139(2) after service of notice. The Tribunal, therefore, found that as soon as a notice under s. 139(2) was served on the assessee the liability to file a return under s. 139(1) came to an end and the Tribunal also found that as on June 28, 1963, the assessee submitted an application for extension of time up to September 30, 1963, and, as this application was not rejected, the Tribunal assumed that the time was extended up to September 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e default committed in respect of non-compliance with s. 139(1), the Tribunal was right in holding that the period of default under s. 139(1) came to an end as soon as notice under s. 139(2) was served on the assessee. According to learned counsel for the assessee, the question would have been different if the ITO had proceeded also to impose a penalty under s. 271(1)(a) for having committed a default in respect of s. 139(2). But that not having been done the view taken by the Tribunal is justified in law. He contended that the two cases of the Rajasthan High Court and the Delhi High Court referred to by learned counsel for the department have considered the question about automatic condonation of delay by issuance of notice under s. 139(2) but have not considered that the period of default under s. 139(1) comes to an end as and when a notice under s. 139(2) is served on the assessee. As regards the application made by the assessee on June 28, 1963, for extension of time it was contended that no grievance could be made in this reference and that is not a question referred to by the Tribunal. On the contrary, it was a question of fact that the Tribunal held that in the absence of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later; (b) in the case of every other person, before the 30th day of June of the assessment year: 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, and notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of sub-section (8). (1A) Notwithstanding anything contained in sub-section (1), no person need furnish under that sub-section a return of his income or the income of any other person in respect of whose total income he is assessable under this Act, if his income or, as the case may be, the income of such other person during the previous year consisted only of income chargeable under the head 'Salaries' or of income chargeable under that head and also income of the nature referred to in any one or more of clauses (i) to (ix) of sub-section (1) of section 80L and the following conditions are ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 74A, he may furnish, within the time allowed under sub-section (1) or within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, allow, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1). (4) (a) Any person who has not furnished a return within the time allowed to him under sub-section (1) or sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in clause (b), and the provisions of sub-section (8) shall apply in every such case ; (b) the period referred to in clause (a) shall be- (i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year; (ii) where the return relates to la previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profession and any branches thereof. (7) No return under sub-section (1) need be furnished by any person for any previous year, if he has already furnished a return of income for such year in accordance with the provisions of sub-section (2). (8) (a) Where the return under sub-section (1) or sub-section (2) or sub-section (4) for an assessment year is furnished after the specified date, or is not furnished, then (whether or not the Income-tax Officer has extended the date for furnishing the return under sub-section (1) or sub-section (2) ], the assessee shall be liable to pay simple interest at twelve per cent. per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return, or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source: Provided that the Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this sub-section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case may be, or (b) has without reasonable cause failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-..." Clause (a) of sub-s. (1) of this section provides that penalty could be imposed for non-compliance with the requirements of sub-s. (1) of s. 139 or for non-compliance with sub-s. (2) of s. 139, and this, therefore, indicates that penalty could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en too the default under s. 139(1) will continue. That would mean that after the notice under s. 139(2) is served and the requisite period is over the assessee would be responsible for two defaults, one, which according to learned counsel is continuing under s. 139(1), and another under s. 139(2). This argument would contemplate that the assessee is required to comply with both the provisions separately. But it is not disputed that the assessee is expected to file only one return even when he is served with a notice under s. 139(2). The decision in CIT v. Indra Co. [1971] 79 ITR 702 (Raj), to which reference was made by learned counsel for the department, has considered the question that as soon as a notice is issued under sub-section (2) of s. 139, the ITO shall be presumed to have condoned the default made in not furnishing the return under sub-s. (1) of s. 139. And it is in this context that it was observed : "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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ressly laid down under s. 139(7) that no return under sub-s. (1) need be furnished by any person for any previous year if he has already furnished the return of income for such year in accordance with the provisions of sub-s. (2). In our opinion, in all the cases mentioned in s. 271(1)(a) of the Act, the default continues only till the time when the return has been furnished or if no return has been furnished at all, it continues till the assessment is completed. But, if the return has been furnished, the default ceases whether such return is furnished under sub-s. (1) of s. 139 or by notice given under sub-s. (2) of s. 139 or under s. 148. It is immaterial for the purpose of cessation of default that the return has been filed in obedience to any particular provision of law." Thus, it is clear that the question that has been referred to us has not been considered in this decision. In the decision in CIT v. Hindustan Industrial Corporation [1972] 86 ITR 657 (Delhi), the question which was referred was in these terms : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that default under section 139(1) of the Act existed only till t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return an assessee could be saddled with penalty for non-compliance with both, s. 139(1) as well as s. 139(2). This is the direct consequence of the view taken in this decision and the contention advanced by learned counsel for the department, although this has not been specifically examined either by the Rajasthan High Court or the Delhi High Court in the two decisions referred to above. But it is apparent that for the same period of default an assessee could not be saddled with two penalties for non-compliance with the two sub-sections of s. 139, i.e.,(1) and (2), as apparently it is not expected of an assesee to file two separate returns as it is clearly provided in s. 139 itself that he is only expected to file one return. In Addl. CIT v. Bihar Textiles [1975] 100 ITR 253 (Pat), the question referred to the Patna High Court was just the other extreme which the Rajasthan High Court repelled; the question referred was: "Whether, on the facts and in the circumstances of the case, the delay under section 139(1) is condoned if the notice under section 139(2) is issued to the assessee?" and in this decision, after considering the respective arguments of both the parties, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms : " When once it is held that, under sub-section (2) of section 139, the Income-tax Officer has power to curtail the period prescribed under section 139(1), it does not stand to reason as to why the power for extending such a time within any point of time in the relevant assessment year be not held to be inherent in him. Consequently, it must also be held that by issuance of a notice under section 139(2) within the relevant assessment year, the period prescribed in sub-section (1) of section 139 was duly extended and no penalty could be levied for any default committed in respect of the provisions of section 139(1)." But that is not the question before us. It is not contended that as notice under s. 139(2) was served on the assessee penalty could not be imposed for non-compliance with section 139(1). In fact, in the present case, penalty has been imposed for non-compliance with section 139(1). And, in this view of the matter, therefore, this decision also is not of much assistance. As discussed above, the real question before us is that after the expiry of the statutory period under s. 139(1) an assessee is in default so far as he has failed in his obligation to file a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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