TMI Blog1971 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 256(1) of the Income-tax Act, 1961 (hereinafter called the Act "), for the opinion of this court on the following four questions : " (1) Whether, on the facts and in the circumstances of the case, the Income-tax Officer should be deemed to have granted extension of time for filing the return when he did not pass any orders on the assessee's application dated September 16, 1963 ? (2) Whether, on the facts and in the circumstances of the case, by the levy of interest calculated under clause (iii) of the proviso to section 139(1) of the Income-tax Act, 1961, the Income-tax Officer must be deemed to have condoned the delay in filing the return of income ? (3) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had the power to levy a penalty under section 271(1)(a) of the Act when he had already levied interest under section 139 ? and (4) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had jurisdiction to levy penalty under section 271(1)(a) of the Act where a return was filed under section 139(4) and penal interest was also levied under the provisions of this latter section ? " In order to appreciate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeared before the Income-tax Officer and stated that there was nothing more to be added to the original explanation already submitted in writing by the assessee. The explanation of the asseesee that its accountant was ill was found to be not convincing, as, if that were the sole reason for not filing the return, it could have applied for extension of time. As it did not request for extension of time within the time required under section 139(1), the Income-tax Officer was of the view that the assessee's explanation that the accountant was sick was only an after-thought. In any event, the Act had allowed a sufficient margin of time (six months) to enable the assessee to get the statements prepared and file returns of income within the time prescribed by law; and it is for the assessee to make proper and appropriate arrangements to comply with the statutory provisions of section 139.The fact that the assessee-firm had the assistance of a chartered accountant also was one of the factors taken into consideration by the Income-tax Officer to arrive at the conclusion that the assessee has without reasonable and sufficient cause failed to file the return of income within the prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to have condoned the delay in filing its return of income under section 139(1) and that by the omission on the part of the Income-tax Officer in not passing any orders on its application for extension of time by one month, it must be deemed that the extension of time as prayed for was granted did not find favour with the Tribunal. The Appellate Tribunal rejected the assessee's contention that the Income-tax Officer by the levy of penal interest must be deemed to have condoned the delay in filing the return of income. The other findings of the Tribunal not relevant to this reference need not be stated. Hence, this reference at the instance of the assessee. The answers to the questions turn upon the scope of the provisions of section 271(1)(a) and sub-sections (1), (2) and (4) of section 139 read with other material provisions of the Act which we shall presently consider and their application to the facts of the present case. Chapter IV comprising of sections 139 to 158 deals with the procedure for assessment. Section 139 prescribes the procedures for the filing of a return of total assessable income and the consequences of the failure or omission to file the same within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reduced in accordance with the reduction of the amount of tax as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 264 of the Act and the excess interest paid, if any, shall be refunded to the assessee. Under sub-section (2) to section 139, the Income-tax Officer may before the end of the relevant assessment year serve a notice upon any person whose total income is in his opinion assessable to tax requiring him to furnish within 60 days from the date of service of such notice a return of his total income. The proviso to sub-section (2) also empowers the Income-tax Officer to extend the date for the furnishing of the return if the same, whether fixed originally or on extension, falls beyond the 30th day of September or the 31st day of December, as the case may be, of the assessment year on payment of interest as per the provisions of clause (iii) of the proviso to sub-section (1). Sub-section (4) provides for the furnishing of a return by an assessee who failed to file the same within the time allowed to him under sub-section (1) or subsection (2) but he must do so before the completion of the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y referred to above shall be levied only after affording a reasonable opportunity of being beard to the assessee. Therefore, interest payable under clause (iii) of the proviso to sub-section (1) to section 139 is nothing but simple interest or compensation that could accrue or would have accrued to the State, if the assessee had filed his return as required by section 139 and paid the tax Rs per the provisions of section 140A. It is not, therefore, correct to state, that the interest so payable is penal in character. Nor does it amount to penalty of any kind levied under the Act. The very intendment and purpose of this provision to levy interest on the amount of tax payable by the assessee is to make the assessees feel their responsibility and statutory obligation to furnish the return of their incomes within the time provided under section 139 of the Act. To put it differently, the assessees will not gain in any way by their failure in, or postponement of, furnishing the returns of their income with the hope that they can postpone the payment of tax to a later date and have the advantage of utility of such amount of tax during such period as they are made to pay interest on such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Clause (c) is attracted in a case where the Income-tax Officer or the Appellate Assistant Commissioner is satisfied that any person concealed the particulars of his income or deliberately furnished inaccurate particulars of his income. This being a more serious one, the minimum penalty, exigible is 20% and the maximum is one and a half times the amount of tax sought to be avoided. Section 272 provides for the levy of penalty on any person who fails to give notice of discontinuance of his business, whereas section 273 provides for the levy of penalty for false estimate of or failure to pay advance tax. The penalty imposable under Chapter XXI cannot be made unless the assessee has been given a reasonable opportunity of being heard. Section 275 bars the income-tax authorities from imposing a penalty under Chapter XXI after the expiration of two years from the date of completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced. Unlike under the 1922 Act, section 275 of the present Act provides for the limitation of two years from the date of the completion of the proceedings in the course of which the proceedings for the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from the levy of penalty under section 271(1)(a), (b) or (c). Those provisions were made by the sovereign Parliament to meet with different situations and protect the interests of the revenue and at the same time make the defaulting or fraudulent assessees realise that they will not only not gain any advantage but also make themselves liable for penalty for their default or failure without reasonable cause to file the returns of income within the time prescribed under section 139 or concealment of their incomes or deliberately furnishing inaccurate particularsof their incomes. In the light of the foregoing discussion we shall now examine the contention of the assessee that the Income-tax Officer must be deemed to have granted extension of time for filing the return when he did not pass any order on its application dated September 16, 1963. As pointed out earlier the application though dated September 16, 1963, was in fact received by the Income-tax Officer only on September 18, 1963. As the application for extension of time was not received by the Income-tax Officer on or before September 16, 1963, within which time the assessee was required as per the notice under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event we are clear in our minds that the assessce herein cannot compel the Income-tax Officer either to pass an order extending the time for furnishing the return or give reasons for refusal of the request. On the application of the aforesaid principles, the contention of the assessee that it must be deemed that the extension of time was granted when the Income-tax Officer did not pass any orders on its application merits rejection. We may add that the assessee did not even file its return on October 16, 1963, as prayed for in its application. The return was filed only on August 3, 1964, and it did not take any interest or steps to know what had happened to its application for extension of time by one month. For all these reasons, our answer therefore, to question No. 1 must be in the negative and against the assessee. We shall now turn to questions Nos. 2 and 3. The contention of Sri Ramachandra Rao that the Income-tax Officer having levied interest under clause (iii) of the proviso to sub-section (1) of section 139 must be deemed to have condoned the delay in filing the return of income of his client cannot be given effect to for reasons more than one. The Income-tax Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , levy of penalty and institution of prosecution for certain commissions or omissions or defaults on the part of the assessees. Where the Act has specifically provided for charge of interest as well as levy of penalty, the courts have to give effect to the same. We may notice in this context the following observations of the learned judge Grover J., who spoke for the court, in Jain Brothers v. Union of India, wherein the imposition of double taxation was justified : " It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax ..... The Constitution does not contain any prohibition against double taxation even if it be assumed that such a taxation is involved in the case of a firm and its partners after the amendment of section 23(5) by the Act of 1956. Nor is there any other enactment which interdicts such taxation ...... If any double taxation is involved the legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. In the present case no return has been filed by the assessee on or before June 30, 1963, as required by section 139(1) of the Act. Indisputably, the provisions of clause (a) of sub-section (1) to section 271 are attracted as the aforesaid fact which is not in dispute is itself sufficient to attract the same. This view of ours gains support from the decision of a Division Bench of the Madras High Court in C.V. Govindarajulu Iyer v. Commissioner of Income-tax. Therein the assessee failed to furnish a return of his total income as required by a general notice issued under section 22(1) of the Indian Income-tax Act, 1922. No notice under section. 22(2) was issued by the Income-tax Officer within the year of assessment. Pursuant to the notice under section 34, a return of income was filed by the assessee within the time given by the officer. Howeever, after completing the reassessment, the Income-tax Officer levied penalty under section 28(1)(a) corresponding to section 271(1)(a) of the present Act for failure without reasonable cause to furnish a return pursuant to the notice under section 22(1). The contention advanced on behalf of the assessee that as there was no notice under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the provisions of section 271(1)(a) are attracted in the instant case and the penalty has been rightly levied by the departmental authorities. On a careful examination of the provisions of section 271(1)(a) read with the material provisions of section 139, we are of the firm view that the Income-tax Officer was competent to levy a penalty under section 271(1)(a) although he had levied interest under clause (iii) of the proviso to sub-section (1) of section 139 as the intendment and purpose of both the imposts are different and distinct and they have been provided to meet different situations and contingencies. In our considered judgment both the penalty under section 271(1)(a) and the interest under clause (iii) of the proviso to sub-section (1) of section 139 are exigible and there is no illegality or unconstitutionality in the same. 'For III the reasons, our answer'to question No. 2 is in the negative and to question No. 3 in the affirmative and against the assessee. We shall now advert to question No. 4. Section 39(4) permits any person to furnish the return of his income for any previous year at any time before the assessment is made; but, however, he is made liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
