TMI Blog1978 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... d the narrow controversy is, whether the filing of return of income in terms of s. 139(4) of the Act absolves the assessee of the default in non-compliance with the terms of s. 139(1) or s. 139(2) of the Act. I may indicate here that in terms of s. 139(7) of the Act an assessee is not required to file his return of income under s. 139(1) for any previous year, if for such year he has already filed a return of income in accordance with s. 139(2) of the Act. Section 139(7) of the Act reads as under : "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)." This court in the case of Bihar Textiles [1975] 100 ITR 253 (Pat) has held that if an assessee is called upon to file his return of income for any previous year through notice under s. 139(2) of the Act, his obligation to file his return of income under s. 139(1) of the Act ceases. Be that as it may, the question still remains, whether the default in compliance with the terms of s. 139(1) of the Act or of the notice under s. 139(2) of the Act is cured by the filing of the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of S. S. Mukherjee Co. (I.T.A. No. 650 Patna of 1969), in which it had observed that under s. 139 of the Act there are three modes for filing return of income, namely, under s. 139(1), under s. 139(2) and s. 139(4) of the Act. A return of income filed within the time prescribed for filing it either under s. 139(1) or under s. 139(2) or under s. 139(4) was a proper return. A person could not file his return of income more than once. If, therefore, a person has filed his return of income in accordance with either of the three specified modes, he will be deemed to have filed a valid return of income absolving him of the default in filing return of income. The provisions of s. 271(1)(a) would not then apply to such a case. The Tribunal, having thus deleted the penalties imposed under s. 271 (1) of the Act against the assessee, at the instance of the department, has made these references to this court under s. 256(1) of the Act. These are all the relevant facts. Mr. Rajgarhia, appearing for the department, submitted that the Tribunal had gone wholly wrong in dealing with the question relating to the imposition of penalty under s. 271(1)(a) of the Act in that manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." I may indicate that cl. (b) aforesaid prescribes the time limit for filing returns of income pertaining to particular assessment years. For the relevant assessment years the time limit prescribed is two years from the end of such assessment year. The aforesaid sub-s. (8), prescribes the rate of interest to be charged, for failure to file the return of income under sub-s. (1) or sub-s. (2) or sub-s. (4) of s. 139 within the specified time or for total failure to furnish a return of income. Thus, sub-s. (4) of s. 139 enables an assessee to file a return of income for the previous year even after the time specified under sub-ss. (1) and (2) have elapsed. The return of income filed in terms of s. 139(4) is a return of income of a special type, distinct from a return filed in terms of sub-s. (1) or sub-s. (2) of s. 139 of the Act. By filing a return of income within the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese observations is that the only requirement for set off of loss being that a valid return should be filed before the assessment is made, and if such a return has been filed, be it under s. 22(1) or be it under s. 22(3) of the said Act, the assessee's claim for the set-off of his loss could not be defeated. Their Lordships were mainly concerned with the question as to whether there has been a compliance of the requirements by filing a valid return which might enable the assessee to the set-off of his loss. This decision can, therefore, be no authority for the proposition as to whether the non-filing of the return of income within the time prescribed under s. 139(1) or s. 139(2) of the Act was or was not a default. The question arising in the instant case, therefore, cannot be answered on the basis of the said decision of the Supreme Court. In fact, the two Full Bench decisions, one of the Orissa High Court and the other of the Allahabad High Court in CIT v. Ganga Ram Chapolia [1976] 103 ITR 613 and Metal India Products v. CIT [1978] 113 ITR 830 have also taken the view that the decision of the Supreme Court in the case of Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518 is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Where the real controversy is, whether the penalty levied under s. 271(1)(a) was legal and valid, it can be viewed from different angles. In this case, it has been approached by the Tribunal from a particular angle, which approach has been found to be incorrect and then the assessee wants it to be viewed from another angle. It is not a new point of law that is being raised, rather, it is a new point of view on the same question which is being raised by learned counsel for the assessee. Moreover, no additional facts are necessary for deciding it. The objection raised by the learned counsel for the department is accordingly rejected. In order to appreciate the contentions raised by Mr. Jain for the assessee, it would be necessary to read the relevant provisions of s. 271 of the Act. They are as under : "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the language of the enactment must be interpreted so that it spells out sense and meaning. Unless otherwise made impossible, such construction should be put upon the enactment which will be consistent with the smooth working of the system which the enactment purports to be regulating, and that construction is to be rejected which would introduce uncertainty, friction or confusion into the working of the system. Bearing these principles in mind, I proceed to deal with the question as to whether the period of default for the purpose of levying penalty in terms of s. 271(1)(a)(i), can be determined by reference to any of the provisions of the Act. One of the provisions which immediately comes to my mind is sub-cl. (i) under section 271(1)(a). The quantum of penalty leviable for default in filing the return of income is prescribed under it. The quantum of penalty is prescribed as : "a sum equal to 2% of the assessed tax for every month during which the default continued, but not exceeding in the aggregate 50% of the assessed tax ". The question is, do the expressions "but not exceeding in the aggregate 50% of the assessed tax" mean that the effective period of default for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emain confined to an assessment year. The default cannot, therefore, be carried over beyond that assessment year. That "assessment" includes the levy of penalty is an accepted principle vide the decisions of the Supreme Court in Abraham v. ITO [1961] 41 ITR 425 and CIT v. Bhikaji Dada Bhai Co. [1961] 42 ITR 123. The levy of penalty under s. 271(1)(a), like an assessment of income to income-tax, must, therefore, remain confined to the happenings within the relevant assessment year. Besides, I think the exclusion of s. 139(4) from the provisions of s. 271(1)(a) of the Act has a great significance, inasmuch as it points towards the non-inclusion of the default in filing the return of income extending into the subsequent assessment year for the purpose of calculating the period of default. It may be stated, that in terms of s. 139(4) of the Act, a return of income could be filed even after the close of the assessment year. The exclusion of s. 139(4), therefore, indicates that the period of default could not extend after the close of the relevant assessment year. In substance, therefore, I think for levying penalty in terms of s. 271(1)(a) of the Act, the period of default starts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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