Full Judgment Text
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CASE NO.:
Appeal (civil) 4114 of 2001
PETITIONER:
Amin Chand Payarelal
RESPONDENT:
Inspecting Asstt. Commissioner,Income Tax & Ors.
DATE OF JUDGMENT: 05/09/2006
BENCH:
ASHOK BHAN & Markandey Katju
JUDGMENT:
J U D G M E N T
Bhan, J.
This appeal is directed against the order dated 28th
September, 2000 passed by a Division Bench of the High
Court of Calcutta in FMA No. 1160 of 1990 whereby the
Division Bench has set aside the order passed by the Single
Judge of the same High Court and dismissed the writ petition
filed by the writ petitioner-appellant.
Brief facts giving rise to file the present appeal by special
leave are as follows:
The appellant filed a writ petition in the High Court, inter
alia, seeking an appropriate writ, order or directions and/or
to withdraw the order dated 26th September, 1974 passed by
the Commission of Income Tax, Central and the orders of
assessment and penalty proceeding under Section 271 (1)(a) of
the Income Tax Act, 1961 (for short "the Act") and the
demand notice issued under Section 156 of the Act and also
the order dated 7th of October, 1974 imposing penalty.
The learned Single Judge before whom the writ petition
came up for hearing allowed the writ petition and held that the
penalty imposed by the Authorities was not in accordance with
law and consequently the order imposing penalty and demand
notice for realization of penalty for the assessment years 1959-
60 to 1965-66 was quashed.
The learned Single Judge allowed the writ petition on the
grounds \026 (a) that the imposition of penalty was without
jurisdiction in view of the fact that interest had been paid for
late filing of the returns for the aforesaid years; and (b) that
the penalty under Section 271 (1)(a) of the act could not be
imposed by the Inspecting Assistant Commissioner of Income
Tax as he had no jurisdiction to do so and, only the Income
tax Officer was competent to impose penalty as per provisions
of Section 271 (1)(a) of the Act.
During the course of arguments, counsel appearing for
the respondent-assessee before the Division Bench of the High
Court, the appellant herein, did not dispute the jurisdiction of
the Inspecting Assistant Commissioner of the Income Tax to
impose the penalty for not filing the returns within the
extended period. The Division Bench recorded the following
findings:
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"\005.However, before us the learned
advocate for the writ
petitioner/respondent did not question of
jurisdiction of the Inspecting Assistant
Commissioner of the Income Tax to
impose penalty on the writ petitioner for
not filing the return within the extended
time, that was granted by the concerned
authority\005."
On the afore-mentioned first point, the Division Bench came to
the conclusion that mere deposit of interest would not absolve
the assessee from its liability to pay the penalty under Section
271 (1)(a) of the Act. To appreciate the contention it is
necessary to understand the scheme enacted in Section 139 of
the Act, as it stood at the relevant time. Broadly, the scheme
envisages a voluntary rturn by the assessee under sub-section
(1) of Section 139, a return consequent upon a notice by the
ITO under under sub-section (2) of Section 139 and a return
in the circumstances mentioned in under sub-section (4) of
Section 139. We are not concerned with the return filed under
sub-section (1) or (3) of Section 139. We are concerned with
the situation where the return has been filed under Section
139 (4) of the Act which at the relevant time read as under:
"(4) (a) Any person 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.
(b) The period referred to in clause (a) shall be-
(i) where the return relates to a previous
year relevant to any assessment year
commencing on or before the 1st day of
April, 1967, four years from the end of
such assessment year;
(ii) where the return relates to a previous
year relevant to the assessment year
commencing on the 1st day of April, 1968,
three years from the end of the
assessment year;
(iii) where the return relates to a previous
year relevant to any other assessment
year, two years from the end of such
assessment year,"
Section 271 provides for levy of penalty under sub-
clause (a)(b) and (c) of sub-section (1) of Section 271. In the
present case, the penalty has been levied under Section 271
(1)(a), as it stood at the relevant time and the same reads as
under:
"271. (1) If the Income-tax Officer or the
Appellate Assistant Commissioner in the
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course of any proceedings under this Act, is
satisfied that any person \026
(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 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"
Under this provision, in essence, three situations are
contemplated in which penalty can be imposed, i.e., (i) where
the assessee 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; (ii) or where the assessee
has without reasonable cause failed to furnish the return of
total income which he was required to furnish by notice given
under sub-section (2) of Section 139 or Section 148; and (iii) or
where the assessee has without reasonable cause failed to
furnish it within the time allowed and in the manner required
by sub-section (1) of Section 139.
The following chart would indicate the dates on which the
returns were required to be filed, the extended time/date
within which they were to be filed and the dates on which they
were actually filed.
Year
Date on which the
return ought to have
been filed
The time was
extended to file
the return
Date on which
return actually
filed
1959 -60
18.06.1959
14.11.1959
04.02.1961
1960-61
20.06.1960
01.10.1962
30.08.1962
1961-62
30.06.1961
31.08.1962
05.10.1962
1962-63
04.08.1963
31.08.1962
05.10.1962
1963-64
Nil
No. appln.
07.12.1964
1964-65
07.06.1964
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30.09.1964
18.01.1965
1965-66
21.07.1965
No. appln.
21.01.1966
Admittedly, the appellant did not file the return either
within the time specified in the statute for doing so or within
the extended period of time. The returns were filed beyond the
extended period for filing the return. Interest on the amount
due and penalty are two different and distinct concepts.
Interest is the accretion on the capital whereas the penalty is a
punishment imposed on a wrong-doer.
Counsel appearing for the assessee in support of the
contention placed reliance on a judgment of this Court in
Commissioner of Income Tax, A.P. Vs. M. Chandra Sekhar
[1985 (151) ITR 433]. In the said case, their Lordships were
dealing with return filed under Section 139(1) of the Act
whereas in the present case the returns had been filed under
Section 139(4). The assessee was absolved of his liability to
pay the penalty under provisos to Section 139(1). It was
observed:
"In the instant case, the extension was a
matter falling within Sub-section (l) of Section 139,
and the returns furnished by the assessee must be
attributed to that provision. They were not returns
furnished within the contemplation of Sub-section
(4) of Section 139. Therefore, the decision, of the
Gujarat High Court in Addl. CIT v. Santosh
Industries, (1974) 93 ITR 563. of the Karnataka
High Court in Nagappa v. ITO, (1975) 99 ITR 32 of
the Andhra Pradesh High Court in Poorna Biscuit
Factory v. CIT, (1975) 99 ITR 41, of the Orissa High
Court in CIT v. Gangaram Chapolia (1976) 103 ITR
613 [FB] and of the Allahabad High Court in Metal
India Products v. CIT, (1978) 113 ITR 830 [FB]
cannot be invoked in the instant case. They are
cases dealing with a return filed in the
circumstances mentioned in Sub-section (4) of
Section 139."
Meaning thereby that cases falling under Section 139(1) and
139(4) have to be dealt with differently. Sub-section (4) of
Section 139 of the Act provides for a situation where the
returns are not filed by an assessee within the time allowed or
within the extended period for filing such returns. In the
present case, the returns in question had not been filed either
within the time allowed under the Act or within the extended
period. The reliance placed on the aforesaid judgment lends
no assistance to the appellant as the principle on which the
aforesaid decision has been rendered is distinguishable and
cannot be applied to the admitted facts in the present case.
In the present case, as mentioned above, the return was
filed under sub-section (4) of Section 139 of the Act. The
question is whether penalty under Section 271(1)(a) could be
levied on a return filed under Section 139(4) fell for
consideration before this Court in Pradip Lamps Works Vs.
Commissioner of Income Tax, 2001 (249) ITR 797. The
question posed in that case was as under:
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Question No. 2:
"Whether, on the facts and the
circumstances of the case, the Tribunal
was right in holding that notwithstanding
that the return of Income had been filed
on February 6, 1961, i.e., within the
period permissible under Section 139(4)
of the Income Tax Act, 1961, the
imposition of a penalty was justified as
there was a delay for the purpose of
section 271(1)(a) of the Income Tax Act,
1961?"
It was answered in the following terms:
"So far as the second question is
concerned, the only submission is that
since the assessee was entitled to and did
file his return before making the
assessment, no penalty should be levied
under Section 271(1)(a), even though the
return was filed beyond the prescribed
date. We do not think that this
contention is sustainable in law. Merely
because, sub-section (4) of Section 139
enables the assessee to file his return at
any time before the assessment is made,
it does not mean that his liability to pay
penalty under Section 271(1)(a) is erased.
We affirm the opinion of the High Court
on this question as well."
We respectfully follow the law laid down in Pradip Lamps
Works’s case (supra). There are number of High Courts who
have taken the same view.
We hold that the penalty could be levied in the present
case under Section 271(1)(a) of the Act.
For the reasons stated hereinabove, we do not find any
merit in this appeal and dismiss the same. The impugned
judgment of the Division Bench is affirmed. Parties to bear
their own costs.
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