TMI Blog1978 (7) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether, on the facts and in the circumstances of the case, penalty could be legally levied for the assessment year 1962-63 under section 271(1)(a) for the default in not filing the return under section 139(1) when the return was filed in response to a specific notice under section 148 read with section 139(2) ? (4) Whether the penalties could be legally levied in view of the fact that the assessee had committed the default only in respect of the time allowed for filing the return and not in respect of the manner in which it was required to be furnished under sub-section (1) of section 139 ? (5) Whether, on the facts and in the circumstances of the case, penalty could be levied under section 271(1)(a) of the Income-tax Act, 1961, when the return was filed within the time allowed under section 139(4) of the said Act ? (6) Whether, on the facts and in the circumstances of the case, the orders under section 271(1)(a) are invalid because they did not specifically set out the period of default and other particulars on the basis of which the amount of penalty was worked out ? (7) Whether, on the facts and in the circumstances of the case, penalty could be imposed under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1)/22(2)/34 of the Indian I.T. Act, 1922, or have without reasonable cause failed to furnish it within the time allowed and in the manner required by the said s. 139(1) or by such notice ". The assessee filed a reply dated December 26, 1964 (annex. " C "), praying for condonation of the default on the ground that the late submission of returns was not wilful. It may be added that there is nothing either in this reply or elsewhere to even remotely suggest that the assessee had any difficulty in understanding the contents of these notices and the ground on which penalty proceedings had been initiated against him. The ITO who had issued these notices (annexs. " B/I " and " B/II ") having been transferred thereafter, his successor-in-office, as a matter of abundant caution, issued two fresh notices dated July 27, 1966, under s. 274 read with s. 271 of the Act, the wordings of which were almost identical to those of the earlier notices, annexs. " B/I " and " B/II ". These fresh notices dated July 27, 1966, are annexs. " D/I " and " D/II ". The relevant portion from these notices is as under : " have without reasonable cause failed to furnish the return of income which you were requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e default of which provision penalty has been imposed on the assessee, was clearly mentioned in all these notices. This is evident from the relevant extracts from the two sets of notices given earlier. Accordingly, we decline to answer the aforesaid questions Nos. (1) and (2) which do not arise for the decision of this court in the present case. Question No. (4) and question No. (7) referred at the instance of the assessee were not pressed at the hearing before us by the learned counsel for the assessee. We, accordingly, answer these questions against the assessee. That leaves for our decision only questions Nos. (3),(5) and (6) referred at the instance of the assessee and question No. (8) referred at the instance of the CIT. We shall consider these questions hereafter. We may add that questions Nos. (3), (5) and (8) are connected and, therefore, it would be more appropriate to consider them together. For this reason, we would first deal with the only other remaining question, viz., question No. (6), before we come to a discussion of questions Nos. (3), (5) and (8). Question No. (6) : In the present case, there is enough material to indicate that the assessee was apprised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for decision was whether the order imposing penalty under s. 271 of the Act was invalid on the ground that the notice issued to the assessee did not correctly specify the default committed by the assessee and that the notice was not signed by the ITO. It was held that no prejudice to the assessee being shown because of any defect in the notice and adequate opportunity to show cause why penalty should not be imposed being given to the assessee, the opportunity contemplated under s. 274 of the Act had been given and the defect in the notice did not invalidate the imposition of penalty. It is obvious that the assessee's challenge to the validity of penalty proceedings in the present case is much weaker. The answer to this question must, therefore, be given against the assessee. Questions Nos. (3), (5) and (8) : The first point to be considered while dealing with these questions is whether the default in compliance with the provisions of sub-s. (1) of s. 139 of the Act is wiped off or even arrested on issuance of a notice by the ITO under sub-s. (2) of s. 139. The Tribunal has taken the view that the giving of a notice under sub-s. (2) of s. 139 by the ITO has the effect of stoppi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose penalty for any default committed in not submitting the return as required by s. 139(1). The Rajasthan High Court reversed the Tribunal's conclusion and took the view already indicated. The reasoning adopted for taking this view is as under : " The Tribunal appears to be unduly obsessed by the fact that if a return has not been furnished as required under sub-section (1) of section 139 and has been furnished after the giving of the notice under section 139(2), it must be deemed that the default so far as the furnishing of the return under sub-section (1) of section 139 is concerned, continued for all the time. The default is in not furnishing the return and as soon as the return is furnished, there is an end of the default. Moreover, it has been expressly laid down under section 139(7) that no return under sub-section (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 of sub-section (2). In our opinion, in all the cases mentioned in section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever default he thinks proper by issuing a notice under section 274 to the assessee for showing cause why penalty should not be imposed on him and by giving reasonable opportunity to him of being heard." With respect, we are in agreement with this view and the reasons given by the Rajasthan High Court to support the same. It is obvious that the contention of the assessee, if accepted, would lead to the result that a wilful and contumacious default in filing the return in accordance with s. 139(1) will go unpunished, even though penalty is provided in s. 271(1)(a) for such a default. The above view of the Rajasthan High Court was referred and followed by the Delhi High Court in CIT v. Hindustan Industrial Corporation [1972] 86 ITR 657. Same is the view taken by the Andhra Pradesh High Court in Mullapudi Venkatarayudu v. Union of India [1975] 99 ITR 448, following the above Rajasthan view. It was clearly held that a default having been committed in not filing the return in accordance with s. 139(1), that default continued up to the date on which the return was filed either in response to the notice under s. 139(2) or under s. 139(4). The argument that issuance of a notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision made in s. 271(l)(a) for punishing such a default. In our opinion, this reason alone is sufficient to prefer the majority view already indicated in preference to the opposite view shown to have been taken only by the Patna High Court. The Allahabad High Court also did not agree with the view taken in the Patna decision, in the above case. It must, therefore, be held that the default made under s. 139(1) ceases only on filing the return whether in answer to the notice under s. 139(2) or under s. 139(4) and that the default is not either arrested or wiped out on a notice being issued under s. 139(2). It is also clear that the filing of a return in accordance with s. 139(4) does not absolve the assessee from the liability of penalty under s. 271(1)(a). These questions must, therefore, be answered accordingly and against the assessee. The result, therefore, is that the assessee's default under s. 139(1) commenced on October 1, 1962, for the assessment year 1962-63 and July 1, 1963, for the assessment year 1963-64 and it continued for both these years up to February 22, 1964, when returns for these years were actually filed by the assessee, for which default the assessee was li ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
