TMI Blog1978 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable income at Rs. 45,805. Finding that there was delay in filing the return, the Income-tax Officer initiated penalty proceedings under section 271(1)(a) of the Act. He imposed a penalty of Rs. 969 for the assessment year 1963-64 and of Rs. 3,312 for the year 1965-66, on the finding that there was a delay of 37 months in filing the return for the earlier and of 12 months in filing the return for the subsequent year. The assessee went up in appeal but failed. The Tribunal also confirmed the view that the assessee having committed default in filing the returns beyond the time prescribed by section 139(1), penalty was leviable. On the question of quantum, the Tribunal returned the case to the Appellate Assistant Commissioner for reconsideration. At the instance of the assessee, the Tribunal has solicited our opinion on the following questions of law: "1. Whether, upon the facts and in the circumstances of the case, the return of income filed under section 139(4) is to be treated as a return filed within time ? 2. Whether, upon the facts and in the circumstances of the case, the assessee was legally liable to penalty under section 271(1)(a) ? " The reference came up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder has been made or after the expiry of four years from the end of the assessment year, it is a waste paper which can be ignored by the Income-tax Officer. It is not a return contemplated by any provision of the Income-tax Act. Sub-sections (1) and (2) of section 139 provide a definite date up to which alone a return can be filed, while sub-section (4) gives to the assessee a locus penitentiae. He may file a return at any time before the assessment has been made and before the expiry of four years. Even though the assessee may have defaulted in filing the return within the time prescribed by sub-sections (1) and (2), yet if he files the return within the time limit mentioned under sub-section (4), the return is valid and is bound to be taken into consideration in making an assessment. We may now examine section 271. This section occurs in Chapter XXI which is headed as "Penalties imposable". Section 271 carries a marginal note, viz., "failure to furnish returns, comply with notices, concealment of income, etc." Clause (a) of section 271(1) deals with failure to furnish returns, clause (b) with failure to comply with notices and clause (c) with concealment of income. Clause (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed his return within the time allowed by sub-section (1) of section 139. In other words, the phrase "within the time allowed ...... by sub-section (1) of section 139" should be construed so as to include the time up to when return may be filed under sub-section (4) of section 139. It is difficult to accept this submission. On its language, clause (a) of section 271(1) refers specifically to sub-section (1) and sub-section (2) only. Sub-section (4) is not referred to at all. In the next place, if the legislature intended that sub-section (4) should act as a proviso to sub-section (1) or sub-section (2), it would have enacted sub-section (4) expressly as a proviso to sub-section (1) or (2) specially when we find that the legislature has enacted several provisos to sub-section (1) and a proviso to sub-section (2). Last, but not least, treating sub-section (4) as a proviso to sub-section (1) or sub-section (2) would render sub-section (1) or sub-section (2) completely superfluous and ineffective for purposes of imposition of penalty under clause (a) of section 271(1). If it was intended that in a case where an assessee files his return at any time up to the making of an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 139 has no relevance to the accrual of the defaults attracting penalty, under clause (a) of section 271(1). Before the Tribunal reliance was placed on the decision of the Supreme Court in Commissioner of Income-tax v. Kulu Valley Transport Co. Ltd. [1970] 77 ITR 518. This case is distinguishable. In that case, no question of imposition of penalty arose for consideration. It was held that a return filed beyond time prescribed by section 22(2A) was a valid return. This Supreme Court decision has been discussed at length by the Gujarat High Court in Additional Commissioner of Income-tax v. Santosh Industries [1974] 93 ITR 563 at 578, by the Madras High Court in K. C. Vedadri v. Commissioner of Income-tax [1973] 87 ITR 76 at 80, by a Full Bench of the Orissa High Court in Commissioner of Income-tax v. Gangaram Chapolia [1976] 103 ITR 613 at 629 and by a Division Bench of this court in Additional Commissioner of Income-tax v. Seth Devi Chand Sons [1978] 111 ITR 724 (All). We respectfully agree with the reasons mentioned in these decisions for distinguishing the Kulu Valley's case [1970] 77 ITR 518 (SC). In all these cases, it has been held that filing of a return within the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 139. All that this decision says is that no penalty was prescribed for failure to furnish a return under sub-section (4) of section 139. There can be no quarrel with this proposition. The Bench observed that the legislature rightly decided that there should be penalty for non-compliance of the requirements of sub-sections (1) and (2). Again, no quarrel can be had with this observation. It seems to suggest that even where a voluntary return has been filed under sub-section (4) of section 139, which is equivalent to sub-section (3) of section 22, yet penalty is leviable for non-compliance with the requirements of sub-sections (1) and (2) of section 139. If at all, this decision is in conformity with the view that has appealed to us and the various High Courts mentioned above. The questions as referred to us do not bring out the true controversy. We accordingly reframe the questions as follows : " 1. Whether, on the facts and in the circumstances of the case, the return of income filed under section 139(4) be treated as a return filed within the time prescribed by section 139(1)? 2. Whether, on the facts and in the circumstances of the case, the assessee was legally liable to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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