TMI Blog1993 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the reply it was submitted that the main source of income was share income from registered firm. The income returned was Rs. 8,100 which was below the taxable limit. However, the assessee became liable to tax due to the fact that the share income of the firm in which the assessee is a partner was assessed at a higher figure than the returned figure. Therefore, it was requested that a lenient view may be taken and the penalty proceedings may be dropped. Subsequent to the original assessment, a search took place in the residential premises of the assessee as well as in the business premises of the firm in which he was a partner. During the course of raid, a sum of Rs. 90,000 in cash was seized besides seizing account books, documents, correspondence files etc. An order under section 135(5) was passed on 25-7-1985 in which investments made by the assessee in his name and in the name of his minor children were found out. Unexplained cash that was available at the time of raid, expenditure on Akai Sterreo, V.C.R and construction of house were noticed and they were considered for assessment years 1981-82 to 1986-87. In pursuance of search proceedings, the assessment was reopended un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended before him that he filed return of income on 19-4-1983 declaring total income of Rs. 8,100 as against the due date of 31-7-1981, that the assessment proceedings were completed on 18-11-1983 and during the course of such proceedings penalty under section 271(1)(a) were initiated. The assessee filed an explanation dated 30-12-1983 inter alia contending that the result of the original penalty proceedings is not made known to him since he had not received any order from the income-tax office. He further contended that the penalty proceedings initiated on 18-11-1983 should have been completed before 31-3-1986 and he should have received the penalty order before that date. Thus in view of the fact that no such order has been received by him the original penalty proceedings initiated on 18-11-1983 has become time-barred. 3. The assessee was subjected to search and seizure operations on 4th and 5th June, 1985. Subsequently notice under section 148 dated 10-10-1985 was served on the assessee in November 1985. The assessee filed a return of income on 16-12-1985 declaring an income of Rs. 18,480. During the course of re-assessment proceedings, penalty proceedings under section 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 ITR 783 (Cal.) (4) CIT v. Ravi Talkies [1982] 137 ITR 176 (Ori.) (5) Chunnilal Bros. v. CIT [1979] 119 ITR 199 (MP). As per the ratio of the above decisions, according to the Dy. Commissioner (Appeals), the assessee cannot escape penalty for belated submission of the return on the ground that he submitted a return in pursuance of notice subsequently issued under section 139(2)/148 and it is not available to argue that penalty should be confined to the period after the issue of notice under section 139(2)/148. The Dy. Commissioner (Appeals) held that admittedly, in the instant case, the assessee had not delayed submission of the return in response to notice under section 148. The delay was committed only for submission of the return in terms of section 139(1) and, therefore, ultimately, he held that according to the above decisions, penalty under section 271(1)(a) becomes exigible. Having been aggrieved against the impugned orders of the Dy. Commissioner (Appeals) dated 8-2-1990, the assessee came up in second appeal before this Tribunal. 4. Though the assessee was served a notice under RPAD fixing the date of hearing of this appeal, he did not choose to appear and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the M.P. High Court's decision also, the reopening under section 148 was made within the two year period available to the revenue but without penalty proceedings initiated under the original assessment proceedings. However, no penalty proceedings initiated under original assessment proceedings were completed and no penalty was levied under the original assessment proceedings. The period of default in submitting the income-tax return under section 139(1) is sought to be equated to the period of default committed in submitting return in pursuance of notice under section 148. In the M.P. High Court's case, the period of default in submitting the return in the reassessment proceedings was only 10 months. However, if the period of default committed in filing return under section 139(1) is taken into account, the default would be 31 months for assessment year 1965-66 and 21 months for assessment year 1968-69. When the matter was ultimately carried to the High Court, the M.P. High Court held that the period of delay can be considered only as 10 months since that was the delay caused in submitting the returns under re-assessment proceedings. It held that in penalty proceedings started unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 139(1), in re-assessment proceedings. All that the Calcutta High Court held in that decision was extracted in the headnote of the decision at page 784 which is as follows: "A person is in default for non-submission of return under section 139(1) cannot escape the liability of being penalised for its non-submission on the ground that he submitted a return pursuant to a notice subsequently issued under section 139(2) or section 148." Thus it can be seen that a plea was raised before the Calcutta High Court in that case that in view of the fact that notice for reopening was issued and return was filed in pursuance of that notice it debars the revenue to pursue the penalty proceedings for the default committed by the assessee under the original assessment proceedings. This contention was negatived. Thus it can be seen that the Calcutta High Court's decision impliedly overrule the contention of the Dy. Commissioner (Appeals) in his impugned order that the issue of notice under section 148 would be an intervening circumstance, which would invalidate the penalty proceedings started under the original assessment proceedings. Thus the Calcutta High Court by implication runs counte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted under section 271(1)(a). Failure to furnish a return without a reasonable cause as required under section 139(1) and failure to furnish without a reasonable cause a return required to be furnished by notice under section 139(2)/148 are the two out of the four different types of defaults enumerated. The Bombay High Court held further as follows as per headnote at page 392: "The four different defaults dealt with in section 271(1)(a) are independent of each other, and for the purpose of penalty, the finding of a return under section 139(2) of the Act, is not to be considered as the filing of a return under section 139(1). Furnishing a return in pursuance of notice issued under section 139(2) would not extinguish the default already committed under section 139(1) in not filing a return as required by that section." Thus, simply because a notice was issued under section 139(2)/148 it cannot be said that the penalty proceedings validly started under the original assessment proceedings would come to a stop without getting time-barred which forms the basis of the impugned order of the Dy. Commissioner (Appeals). Since the very basis of the impugned order is not correct, the pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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