TMI Blog1974 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 139(2) is issued to the assessee ? " (2) If the answer to the above question is in the negative, then-- " Whether, on the facts and in the circumstances of the case, the period of default was rightly computed for a month ? " The facts of the case, shorn of all details, can be recapitulated from the statement of the case itself. The assessee is a firm which carries on business in silk. The previous year of the assessee ended on the 19th of June, 1966. The income-tax return under section 139(1) of the Act was due to be filed on the 30th June, 1967, No such return was filed by the assessee. The Income-tax Officer then issued a notice on the 1st of January, 1968, under sub-section (2) of section 139, before the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that once a notice under section 139(2) was validly issued, the default, if any, for which a penalty under section 271(1)(a) of the Act could be levied would be in respect of the default which the assessee had committed by not furnishing the return, as it was required to do by the notice given under section 139(2). The Appellate Assistant Commissioner, accordingly, determined the period of default for one month and directed the Income-tax Officer to recompute the penalty. The revenue having preferred an appeal before the Income-tax Appellate Tribunal, it was contended on behalf of the department, that, since the assessee did not file the return under section 139(1), even though a notice under section 139(2) was issued allowing thirty da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued under sub-section (2) of section 139 would amount to condonation of default on the part of the assessee to file is return under sub-section (1) of section 139 the Tribunal has further observed that, although there is no power of condonation expressly prescribed by the statute, it should nevertheless be inferred that the issuance of a valid notice under sub-section (2) of section 139 could, by implication, amount to a condonation of the default of the requirements of sub-section (1) of section 139. The question as to whether the delay or the default to comply with the requirements of sub-section (1) of section 139 of the Act was condoned or not is, in my view, not very material for the point involved in this case. The penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case, may be, or...... He may direct that such person shall pay by way of penalty....... " On a plain reading of the statutory provision it will be seen that clause (a) of sub-section (1) of section 271 envisages three different kinds of default on the part of an assessee for which a penalty may be imposed. The three classes of default are these : (i) failure of the assessee, without reasonable cause, to furnish the return within the time prescribed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 139 (2)), as the case may be ". (The brackets are mine). Once, therefore, a notice is issued under section 139(2), the penalty under clause (a) of sub-section (1) of section 271, if any, can be imposed for any default on the part of the assessee to comply with the directions in the notice. That obviously will preclude a penalty being imposed for failure to furnish the return under sub-section (1) of section 139. As a necessary corollary, it would follow that once a notice under sub-section (2) of section 139 is duly issued and time is granted therein by the Income-tax Officer, the law does not contemplate any penalty to be imposed in respect of any default for failure to comply with the provisions of sub-section (1) of section 139. To t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(a), in my view, is clear enough ; and, even if it be held to be of ambiguous import, or if there be any doubt as to the true interpretation of the penal provisions contained in section 271(1)(a), the interpretation of the statute has, on the authority of the Supreme Court's decision in Abraham's case, to be made in a manner favourable to the taxpayer. There is yet another aspect of the matter which deserves notice in this connection. It is beyond any controversy that the Income-tax Officer is empowered under section 139(2) of the Act to issue a notice even before the period prescribed under section 139(1). And, if the assessee makes a default in complying with the terms of the notice under section 139(2), even if the period fixed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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