AMIN CHAND PAYARELAL versus INSPECTING ASSTI. COMMISSIONER, INCOME TAX AND ORS.

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 Hign Court and dismissed the writ petition filed by the writ petitioner-appellant.

p. 731, margin B

Brief facts giving rise to file the present appeal by special leave are as follows:

p. 731, margin B

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 Commissioner of Income Tax, Central and the orders of assessment and penalty proceeding under Section 271 (I )(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.

p. 731, margin B

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.

p. 731, margin F

The learned Single Judge allowed the writ petition on the grounds(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 H impose penalty as per provisions of Section 27l(l)(a) of the Act.

pp. 731–732, margin F

During the course of arguments, counsel appearing for the respondentassessee before the Division Bench of the High Court, the appellant did not dispute the jurisdiction of the Inspecting Assistant Commissioner of the Income Tax to impose the penalty for not filing the returns within extended period. The Division Bench recorded the following findings:

p. 732, margin A

" .... 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

p. 732, margin B

the concerned authority ..... " 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 to pay the penalty under Section 27l(l)(a) of the Act. To appreciate contention it is necessary to understand the scheme enacted in Section of the Act, as it stood at the relevant time. Broadly, the scheme envisages a voluntary return by the assessee under sub-section (I) of Section return consequent upon a notice by the ITO under sub-section (2) of 139 and a return in the circumstances mentioned in under sub-section Section 139. We are not concerned with the return filed under sub-section or (3) of Section 139. We are concerned with the situation where the has been filed under Section 139( 4) of the Act which at the relevant time as under:

p. 732, margin C

"(4)(a) Any person who has not furnished a return within the allowed to him under sub-section (I) or sub-section (2) may, the assessment is made, furnish the return for any previous any time before the end of the period specified in clause (b ), 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 assessment year commencing on or before the I st day of

p. 732, margin E

1967, four years from the end of such assessment year; (ii) where the return relates to a previous year relevant assessment year commencing on the 1st day of April, 1968, years from the end of the assessment year; (iii) where the return relates to a previous year relevant to any other A assessment year, two years from the end of such assessment

pp. 732–733, margin G

year,"

p. 733

Section 271 provides for levy of penalty under sub-clauses (a)(b) and (c) of sub-section (1) of Section 271. In the present case, the penalty has been levied under Section 27l(l)(a), as it stood at the relevant time and the same B reads as under:

p. 733

"271. (I) 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 (I) 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)

p. 733

of Section 139 or by such notice, as the case may be, or" D 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 E 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 (I) of Section 139.

p. 733

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. A Year Date on which the The time was Date on which return ought to extended to file return actually

pp. 733–734

have been filed the return filed 1959-(.0 18.06.1959 14.11.1959 04.02.1961 1960-61 20.06.1960 01.10.1962 30.08.1962 1%1-62 30.06.1961 31.08.1962 05.10.1962 1%2-63 04.08.1963 31.08.1962 05.10.1962 1%3-64 Nil No. appln. 07.12.1964 1%4-65 07.06.1964 30.09.1964 18.01.1965 1%5-66 21.07.1965 No. appln. 21.01.1966

p. 734

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

p. 734

returns were filed beyond the extended period for filing the return. Interest on the amount due and penalty are two different and distinct concepts.

p. 734

Interest is the accretion on the capital whereas the penalty is a punishment imposed on a wrong-doer.

p. 734, margin D

Counsel appearing for tlie assessee in support of the contention placed

p. 734, margin D

reliance on a judgment of this Court in Commissioner of Income Tax, A.P. v. E M Chandra Sekhar, (I 985) 15 I !TR 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 f 3 9( 4 ). The assessee was absolved of his liability to pay the penalty under provisos to Section

p. 734, margin D

139(1). It was observed: F "In the instant case, the extension was a matter falling within Subsection (I) 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,

p. 734, margin D

the decision, of the Gujarat High Court in Addi. CIT v. Santosh G Industries, (1974) 93 !TR 563. of the Karnataka High Court in Nagappa v. ITO, (1975) 99 !TR 32 of the Andhra Pradesh High Court in Poorna Biscuit Factory v. CIT, ( 197 5) 99 !TR 4 I , of the Orissa High Court in CIT v. Gangaram Chapolia, (1976) 103 !TR 613 [FB) and of the Allahabad High Court in Metal India Products v. CIT, (1978) 113 !TR

p. 734, margin D

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)

p. 734, margin D

of Section 139." Meaning thereby that cases falling under Section 139(1) and be dealt with differently. Sub-section (4) of Section 139 of for a situation where the returns are not filed by an assessee allowed or within the extended period for filing such returns. case, the returns in question had not been filed either within under the Act or within the extended period. The reliance aforesaid judgment lends no assistance to the appellant as which the aforesaid decision has been rendered is distinguishable be applied to the admitted facts in the present case.

p. 735, margin A

In the present case, as mentioned above, the return was section (4) of Section 139 of the Act. The question is whether penalty Section 271(1)(a) could be levied on a return filed under Section consideration before this Court in Pradip Lamps Works v. Income Tax, (2001) 249 ITR 797. The question posed in under:

p. 735, margin C

Question No. 2: "Whether, on the facts and the circumstances of the was right in holding that notwithstanding that the had been filed on February 6, 1961, i.e., within the under Section 139(4) of the Income Tax Act, 1961, a penalty was justified as there was a delay for the 271(l)(a) of the Income Tax Act, 1961?" It was answered in the following terms: "So far as the second question is concerned, the only that since the assessee was entitled to and did file making the assessment, no penalty should be levied 271(1)(a), even though the return was filed beyond date. We do not think that this contention is sustainable Merely because, sub-section (4) of Section 139 enables to file his return at any time before the assessment not mean that his liability to pay penalty under Section erased. We affirm the opinion of the High Court on

p. 735, margin D

well." We respectfltlly follow the law laid down in Pradip Lamps Works A (supra). There are number of High Courts who have taken the same view.

pp. 735–736, margin G

We hold that the penalty could be levied in the present case under Section 27l(l)(a) of the Act.

p. 736

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. N.J. Appeal dismissed.

p. 736

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p. 736, margin B