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T. Venkata Krishnaiah and Co. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. 46 of 1969
Judge
Reported in[1974]93ITR297(AP)
ActsIncome Tax Act, 1961 - Sections 139, 139(1), 139(2), 271, 271(1) and 274
AppellantT. Venkata Krishnaiah and Co.
RespondentCommissioner of Income-tax
Appellant AdvocateT. Ramachandrarao, Adv.
Respondent AdvocateP. Ramarao, Adv.
Excerpt:
(i) direct taxation - filing of return - sections 139, 139 (1), 139 (2), 271, 271 (1) and 274 of income tax act, 1961 - whether income-tax officer should be deemed to have granted extension of time for filing return when he did not pass any orders on assessee's application dated 16.09.1963 - assessee has statutory duty and obligation to furnish a voluntary return of his total income on or before 30th july or 31st december - income-tax officer empowered to extend date for furnishing return of income on application made by assessee under section 139 (1) of act - power vested in income-tax officer is discretionary - assessee did not even file its return on 16.10.1963 - return was filed only on 03.08.1964 - no steps taken to know what had happened to its application for extension of time by.....kondaiah, j. 1. this is a reference made by the income-tax appellate tribunal, hyderabad bench, at the instance of m/s. t, venkata krishnayya & co., guntur (hereinafter called ' the assessee '), under section 256(1) of the income-tax act, 1961 (hereinafter called ' the act'), for the opinion of this court on the following four questions : ' (1) whether, on the facts and in the circumstances of the case, the income-tax officer should be deemed to have granted extension of time for filing the return when he did not pass any orders on the assessee's application dated september 16, 1963 (2) whether, on the facts and in the circumstances of the case, by the levy of interest calculated under clause (iii) of the proviso to section 139(1)of the income-tax act, 1961, the income-tax officer must.....
Judgment:

Kondaiah, J.

1. This is a reference made by the Income-tax Appellate Tribunal, Hyderabad Bench, at the instance of M/s. T, Venkata Krishnayya & Co., Guntur (hereinafter called ' the assessee '), under Section 256(1) of the Income-tax Act, 1961 (hereinafter called ' the Act'), for the opinion of this court on the following four questions :

' (1) Whether, on the facts and in the circumstances of the case, the Income-tax Officer should be deemed to have granted extension of time for filing the return when he did not pass any orders on the assessee's application dated September 16, 1963

(2) Whether, on the facts and in the circumstances of the case, by the levy of interest calculated under Clause (iii) of the proviso to Section 139(1)of the Income-tax Act, 1961, the Income-tax Officer must be deemed to have condoned the delay in filing the return of income

(3) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had the power to levy a penalty under Section 271(1)(a) of the Act when he had already levied interest under Section 139(1) and

(4) Whether, on the facts and in the circumstances of the case, the Income-tax Officer had jurisdiction to levy penalty under Section 271(1)(a) of the Act where a return was filed under Section 139(1) and penal interest was also levied under the provisions of this latter section '

2. In order to appreciate the scope of the questions it is necessary to refer briefly to the material facts that gave rise to them. For the assessment year 1963-64, relevant to the accounting year ending on December 31,1962, the assessee, a registered firm of six partners carrying on business in tobacco, had to file its return of income under Section 139(1) of the Act oa or before June 30, 1963. As the assessee did not file its return before the due date, a notice under Sub-section (2) of Section 139 issued by the Income-tax Officer was served on the assessee on August 16, 1963, calling upon it to file the return of its income for that year on or before September 16, 1963. No return of income was filed before September 16,1963, but however an application for extension of time for the filing of the return till October 16, 1963, was filed before the Income-tax Officer on that day. That application was in fact received by the Income-tax Officer on September 18, 1963. No order thereon either rejecting or granting the extension prayed for by the assessee was passed by the Income-tax Officer. Nor had the assessee filed the return of its income onOctober 16, 1963, up to which date the extension was prayed for, in its application dated September 16, 1963. In fact the return of the assessee's income for the assessment year 1963-64 was filed only on August 3, 1964. The Income-tax Officer completed the assessment by his order dated September 15, 1964, under Section 143(3) of the Act determining its net income at Rs. 1,24,580. In the order of assessment, a sum of Rs. 3,908.48 towards interest under Section, 139 of the Act was added to the total demand raised thereon.

3. After the completion of the assessment a notice under Section 274 read with Section 271 of the Act to show cause as to why a penalty for the default committed by the assessee-firm in tiling its return should not be levied, was issued by the Income-tax Officer. In response to the aforesaid penalty notice, the assessee by its letter, dated October 7, 1964, informed the Income-tax Officer that due to the illness of its accountant the return of income could not be filed within time. As the explanation submittedby the assessee was not found to be acceptable by the Income-tax Officer, a specific opportunity for personal appearance to explain the circumstanceswas afforded to the asses see. The authorised representative of the assessee appeared before the Income-tax Officer and stated that there was nothing more to be added to the original explanation already submitted in writing by the assessee. The explanation of the asses see that its accountant was ill was found to be not convincing, as, if that were the sole reason for not filing the return, it could have applied for extension of time. As it did not request for extension of time within the time required under Section 139(1), the Income-tax Officer was of the view that the assessee's explanation that the accountant was sick was only an after-thought. In any event, the Act had allowed a sufficient margin of time (six months) to enable the assessee to get the statements prepared and file returns of income within the time prescribed by law ; and it is for the assessee to make proper and appropriate arrangements to comply with the statutory provisions of Section 139. The fact that the assessee-firm had the assistance of a chartered accountant also was one of the factors taken into consideration by the Income-tax Officer to arrive at the conclusion that the assessee has without reasonable and sufficient cause failed to file the return of income within the prescribed time and levied a penalty of Rs. 20,222 under Section 271(1)(a) of the Act. On appeal to the Appellate Assistant Commissioner against the order of penalty passed by the Income-tax Officer, it was contended that the failure on the part of the assessee to furnish the return within the time was due to illness of its accountant, that the previous record of the firm was very good, that the Income-tax Officer must be presumed to have granted extension of time when no order had been passed by him on its application dated September 16, 1963, that the Income-tax Officer must be presumed to have condoned the delay in filing the return when he levied penal interest under Clause (iii) of the proviso to Section 139(1) and the rebate in respect of exported goods to which the assessee-firm was entitled should have been taken into account by the Income-tax Officer in computing the penalty. None of the pleas raised by the assessee did find favour with the Appellate Assistant Commissioner. But, however, he was of the view that the assessee should be deemed to be in default only from October 16, 1963, as the Income-tax Officer had not rejected the application of the assessee filed for extension of time till September 16, 1963. He also took into account the reduction in tax demand which was made in the assessment appeal and directed the Income-tax Officer to reduce the penalty accordingly. Both the assessee and the department being aggrieved by the order of the Appellate Assistant Commissioner, preferred appeals to the Income-tax Appellate Tribunal. The finding of the Appellate Assistant Commissioner that the default should be deemed to, have occurred only from October 16, 1963, but not from July 1, 1963, as held by the Income-tax Officer was challenged by the department whereas the assesseequestioned the very levy of penalty reiterating its grounds raised before the Appellate Assistant Commissioner. The Income-tax Appellate Tribunal, on a consideration of the entire facts and circumstances, came to the conclusion that the explanation offered by the assessee for the delay in filing its return was not acceptable. It found that the assessee was not prevented by any reasonable or sufficient cause from filing its return within the time permissible under Section 139(1). The contention of the assessee that by the issuance of the notice under Section 139(1) the Income-tax Officer must be deemed to have condoned the delay in filing its return of income under Section 139(1) and that by the omission on the part of the Income-tax Officer in not passing any orders on its application for extension of time by one month, it must be deemed that the extension of time as prayed for was granted did not find favour with the Tribunal. The Appellate Tribunal rejected the assessee's contention that the Income-tax Officer by the levy of penal interest must be deemed to have condoned the delay in filing the return of income. The other findings of the Tribunal not relevant to this reference need not be stated. Hence, this reference at the instance of the assessee.

4. The answers to the questions turn upon the scope of the provisions of Section 271(1)(a) and Sub-sections (1), (2) and (4) of Section 139 read with other material provisions of the Act which we shall presently consider and their application to the facts of the present case. Chapter IV comprising of Sections 139 - 158 deals with the procedure for assessment. Section 139 prescribes the procedures for the filing of a return of total assessable income and the consequences of the failure or omission to file the same within the time allowed thereunder. Unlike the corresponding Section 22 of the Indian Income-tax Act, 1922, Sub-section (1) to Section, 139(1)does not provide for the issuance of the general or public notice. It expressly requires every person to furnish voluntarily a return of his total income or the income of any other person in respect of which he is assessable under the Act. If the income of any previous year exceeded the maximum amount exigible to tax, the return must be in the prescribed form and verified in the prescribed manner and shall furnish the requisite material particulars relating to income. The assessee under the present Act has a statutory duty and obligation to furnish a voluntary return of his total income on or before the 30th July or 31st December, as the case may be. However, the proviso to Sub-section (1) to Section 139(1) empowers the Income-tax Officer to extend the date for furnishing the return of income if an application thereof has been made in the prescribed manner by the assessee. The aforesaid power vested in the Income-tax Officer is discretionary. He is, therefore, not bound to exercise his discretion invariably in favour of the assessee as the word used is ' may ' but not ' shall'. In cases fallingwithin Clauses (i) and (ii) of the proviso to Sub-section (1) to Section 139(1), the Income-tax Officer is empowered to extend the time for filing the return without charging any interest; but where the Income-tax Officer extends the time up to any period falling beyond the dates specified in Clauses (i) and (ii) referred to above, interest shall be payable from the 1st day of October or the 1st day of January of the assessment year to the date of the furnishing of the return. The rate of interest payable under this proviso was only 6% prior to October 1, 1967, and, thereafter, it has been enhanced to 9% per annum. In the case of a registered firm or an unregistered firm assessed under Clause (b) of Section 183 interest must be calculated on the basis of the amount of tax which would have been payable if the firm had been assessed in the status of an unregistered firm and, in any other case, on the amount of tax payable on the total income. By virtue of the provision of Sub-section (1A) inserted by Section 8 of the Finance Act, 1963, with retrospective effect from the commencement of the Act, the interest imposed by the Income-tax Officer shall be reduced in accordance with the reduction of the amount of tax as a result of an order under Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 264 of the Act and the excess interest paid, if any, shall be refunded to the assessee.

5. Under Sub-section (2) to Section 139(1), the Income-tax Officer may before the end of the relevant assessment year serve a notice upon any person whose total income is in his opinion assessable to tax requiring him to furnish within 60 days from the date of service of such notice a return of his total income. The proviso to Sub-section (2) also empowers the Income-tax Officer to extend the date for the furnishing of the return if the same, whether fixed originally or on extension, falls beyond the 30th day of September or the 31st day of December, as the case may be, of the assessment year on payment of interest as per the provisions of Clause (iii) of the proviso to Sub-section (1). Sub-section (4) provides for the furnishing of a return by an assessee who failed to file the same within the time allowed to him under Sub-section (1) or Sub-section (2) but he must do so before the completion of the assessment. In such a case the provisions of Clause (iii) of the proviso to Sub-section (1) empowering the Income-tax Officer to levy interest are attracted. Sub-section (5) provides for the furnishing, of a revised return by the assessee at any time before the assessment is made. Sub-section (8) has invested the Income-tax Officer with a power to reduce or waive the interest payable by any person under any provision of Section 139(1) in such cases and under such circumstances as may be prescribed therefor. Hence, it admits of no doubt that the Income-tax Officer is competent to waive or reduce the interest payable by any assessee under any provision of Section 139(1) in proper and appropriate cases. Thispower has been invested in the Income-tax Officer notwithstanding the provisions of Clause (iii) of the proviso to Sub-section (1).

6. We shall now advert to the intendment and purpose of Clause (iii) of the proviso to Sub-section (1) to sec'tion 139(1) and its applicability to cases falling under the proviso to Sub-section (2) and Sub-section (4) of Section 139(1). It is pertinent to notice that the expression used is ' interest ' but not penal interest. It is chargeable on the basis of the amount of tax which would have been payable by the assessee. The period for which such interest is exigible is from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the actual date of furnishing the return, It may be noted that the rate of interest payable under the aforesaid provision has been enhanced from 6% to 9% per annum from October 1, 1967. It is pertinent to notice that Section 140A provides for self-assessment whereas Section 141 provides for provisional assessment. Under Section 140A the assessee is obliged statutorily to pay the tax payable on the basis of the return of income furnished by him under Section 139(1) within 30 days thereafter. The amount of tax paid under self-assessment shall be taken into account when the provisional assessment under Section 141 or regular assessment under Section 144 will be made. Sub-section (3) to Section 140A makes every assessee who fails to pay the tax or any part thereof in accordance with the provisions of Sub-section (1) liable to pay penalty as directed by the Income-tax Officer although it (penalty) shall not exceed 50% of the amount of such tax or part, as the case may be. No doubt, the penalty referred to above shall be levied only after affording a reasonable opportunity of being heard to the assessee. Therefore, interest payable under Clause (iii) of the proviso to Sub-section (1) to Section 139(1) is nothing but simple interest or compensation that could accrue or would have accrued to the State, if the assessee had filed his return as required by Section 139(1) and paid the tax as per the provisions of Section 140A. It is not, therefore, correct to state that the interest so payable is penal in character. Nor does it amount to penalty of any kind levied under the Act. The very intendment and purpose of this provision to levy interest on the amount of tax payable by the assessee is to make the assessees feel their responsibility and statutory obligation to furnish the return of their incomes within the time provided under Section 139(1) of the Act. To put it differently, the assessees will not gain in any way by their failure in, or postponement of, furnishing the returns of their income with the hope that they can postpone the payment of tax to a later date and have the advantage of utility of such amount of tax during such period as they are made to pay interest on such tax demands.

7. We shall now advert to Section 271 comprised in Chapter XXI dealing with penalties imposable under the Act. Section 271 empowers theIncome-tax Officer and the Appellate Assistant Commissioner to impose penalty on such of the assessees if the conditions specified in Clause (a) or Clause (b) or Clause (c) thereof have been satisfied. Under Clause (a) of Sub-section (1) to Section 271 the Income-tax Officer or the Appellate Assistant Commissioner is competent to levy a penalty of a sum equal to 2% of the tax for every month during which the default continued. The aforesaid sum of penalty is in addition to the amount of tax payable by the assessee. However, the penalty so imposable shall not exceed in the aggregate 50% of the tax. In order to attract the provisions of Section 271(1)(a) the Income-tax Officer or the Appellate Assistant Commissioner must be satisfied that the assessee has without reasonable cause failed to furnish his return of income voluntarily within the time prescribed under subsection (1) to Section 139(1) or by notice given under Sub-section (2) to Section 139(1) or Section 148. The satisfaction of the Income-tax Officer or the Appellate Assistant Commissioner that the assessee has failed to furnish the return as required by the provisions of the Section must be in the course of the proceedings under the Act. Where any person failed to furnish his return within the time allowed under Sub-section (1) to Section 139(1) and in the manner required by a notice under Sub-section (2) to Section 139(1) he is liable to pay penalty under this Act. In other words the provisions of Section 271(1)(a) will be attracted if without reasonable cause a person fails to furnish a return voluntarily or as required by the notice under Section 139(2) if it was not filed within the time allowed and in the manner required by the aforesaid provisions. The return filed must be in the prescribed manner furnishing the requisite particulars. Reasonable cause must be construed as sufficient cause. Clause (b) of Sub-section (1) of Section271 is attracted when there is a failure without any reasonable cause on the part of any person to comply with a notice under Sub-section (1) of Section 142 or Sub-section (2) of Section 143(3). Where Clause (b) is attracted the minimum sum of penalty is 10% and the maximum is 50% of the amount of tax sought to be avoided by the assessee. Clause (c) is attracted in a case where the Income-tax Officer or the Appellate Assistant Commissioner is satisfied that any person concealed the particulars of his income or deliberately furnished inaccurate particulars of his income. This being a more serious one, the minimum penalty exigible is 20% and the maximum is one and a half times the amount of tax sought to be avoided. Section 272 provides for the levy of penalty on any person who fails to give notice of discontinuance of his business, whereas Section 273 provides for the levy of penalty for false estimate of or failure to pay advance tax. The penalty imposable under Chapter XXI cannot be made unless the assessee has been given a reasonable opportunity of being heard. Section 275 bars the income-tax authorities from imposing a penalty underChapter XXI after the expiration of two years from the date of completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced. Unlike under the 1922 Act, Section 275 of the present Act provides for the limitation of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced for passing the order of penalty. Under Section 28 of the old Act, there was no time limit to pass the order of penalty, if the Income-tax Officer or the Appellate Assistant Commissioner was satisfied in the course of any proceedings under the Act that the requisite conditions of Clause (a), (b) or (c) thereof have been established.

8. The provisions of Sections 276 to 280 comprised in Chapter XXII provide for prosecutions and offences. The making of a false statement in a declaration under the Act is punishable under Section 277 with rigorous imprisonment for a period of not less than 6 months but which may extend up to two years. The persons who are liable to the imposition of penalty under Section 271 may also at the same time be liable to prosecution for any of the offences specified in Chapter XXII. Under the present Act if the levy of penalty exceeds Rs. 1,000 it is the Inspecting Assistant Commissioner that is empowered to complete the penalty proceedings but not the Income-tax Officer. However we may add that it is the Income-tax Officer who is competent to issue a notice under Section 274(1) as to why penalty should not be levied; and after receipt of the explanation or on a consideration of the facts and circumstances, if the Income-tax Officer prima facie finds that the minimum penalty exigible in any given case is Rs. 1,000 or more the file shall be transferred to the Inspecting Assistant Commissioner who shall deal with the case according to the provisions of the Act and complete it. The penal provisions have been provided to deal with contumacious or fraudulent assessees. The purpose and object of Clause (iii) of the proviso to Sub-section (1) to Section 139 is to provide for levy of interest on the amount of tax payable by the assessee for his failure to furnish the return of his income as provided in Section 139(1). Such interest can, under no stretch of reasoning, be held to be penalty or penal interest as the same is being charged because the State could or would have earned so much of amount, profit or interest on the amount of tax payable by the assessee if the return was filed as required under Section 139 and tax paid thereon as per the provisions of Section 140A. The purpose, intendment or object of levying interest under Clause (iii) of the proviso to Sub-section (1) of Section 139(1) is undoubtedly different from the levy of penalty under Section 271(1)(a), (b) or (c). Those provisions were made by the sovereign Parliament to meet with different situations and protect the interests of the revenue and at the same time make the defaulting orfraudulent assessees realise that they will not only not gain any advantage but also make themselves liable for penalty for their default or failure without reasonable cause to file the returns of income within the time prescribed under Section 139(1) or concealment of their incomes or deliberately furnishing inaccurate particulars of their incomes.

9. In the light of the foregoing discussion we shall now examine the contention of the assessee that the Income-tax Officer must be deemed to have granted extension of time for filing the return when he did not pass any order on its application dated September 16, 1963. As pointed out earlier the application though dated September 16, 1963, was in fact received by the Income-tax Officer only on September 18, 1963. As the application for extension of time was not received by the Income-tax Officer on or before September 16, 1963, within which time the assessee was required as per the notice under Sub-section (2) to Section 139(1) to file his return, the Income-tax Officer was not bound under the provisions of the Act or any rules made thereunder to pass any order thereon. It is not open to the assessee to file an application beyond the period within which it was required to file its return as per the notice under Section 139(1), and, thereafter, make no effort to know what happened to its application. The assessee should not assume or presume that any application filed by it for extension of time to file the return of income would automatically be granted. It is the duty of the assessee to file in advance an application for extension of time and obtain the extension on or before the date on which it is required to furnish its return of income. It admits of no doubt that whether to grant or refuse to grant extension of time for filing the return of any person is within the discretion of the Income-tax Officer. This view of ours gains support from the very use of the words ' in his discretion ' in the proviso to Sub-section (1) to Section 139(1). This discretion vested in the Income-tax Officer, being a statutory one, must be exercised fairly, reasonably and objectively but not arbitrarily or with malice or caprice. There is no provision in the Act or the rules made thereunder which requires the Income-tax Officer to pass an order on an application filed by an assessee subsequent to the time given to him for filing his return pursuant to a notice under Sub-section (2) to Section 139(1). The Income-tax Officer has to apply his mind to the facts and circumstances of each case and decide whether it was a fit case to grant extension of time or not. There is no hard and fast rule of universal application. We may add that there is no scope for presuming or assuming that an application filed by an assessee for extension of time must have been granted in its favour when no order has been passed on its application by the Income-tax Officer. There is no scope for such a presumption or deeming provision in a taxing statute. The Income-tax Act is a self-contained code. The provisions of the Act and the Rules made thereundermust specifically provide for such a deeming provision. Otherwise, the assessee cannot claim any advantage or derive benefit when the Income-tax Officer did not pass any order on its application filed beyond the time within which it was required to furnish its return. In any event we are clear in our minds that the assessee herein cannot compel the Income-tax Officer either to pass an order extending the time for furnishing the return or give reasons for refusal of the request. On the application of the aforesaid principles, the contention of the assessee that it must be deemed that the extension of time was granted when the Income-tax Officer did not pass any orders on its application merits rejection. We may add that the assessee did not even file its return on October 16, 1963, as prayed for in its application. The return was filed only on August 3, 1964, and it did not take any interest or steps to know what had happened to its application for extension of time by one month. For all these reasons, our answer, therefore, to question No. 1 must be in the negative and against the assessee.

10. We shall now turn to questions Nos. 2 and 3. The contention of Sri Ramachandra Rao that the Income-tax Officer having levied interest under Clause (iii) of the proviso to Sub-section (1) of Section 139(1) must be deemed to have condoned the delay in filing the return of income of his client cannot be given effect to for reasons more than one. The Income-tax Officer is no doubt elnpowered to extend the time for furnishing the return of any person on his application in the prescribed manner beyond the dates within which he has to file the same. In cases falling under Clauses (i) and (it) of the said proviso, the officer may extend the time without charging any interest. However, where the case falls under Clause (iii) he shall levy interest as provided therein. The levy of interest, as stated earlier, does not ipso facto make the filing of the return by the assessee within the prescribed time. The Income-tax Officer, in his discretion, is competent to extend the date for furnishing the return up to any period falling beyond the dates mentioned in Clauses (i) and (ii) in which case interest at 6% for the assessment year 1963-64 shall be payable from October 1, 1963, to August 3, 1964. The intendment and purpose of levy of interest under Clause (iii) of the proviso to Section 139(1) is only to collect interest on the amount of tax due and payable by the assessee as per the provisions of the Act. It can by no stretch of reasoning be stated that the Income-tax Officer by the imposition of interest must be deemed to have condoned the delay in filing the return of income. This provision must be construed as a concession shown by the authors of the Act to the assessee to file their returns of income on payment of some interest; but nowhere it is stated either in Section 139(1) or Section 271(1)(a) or any other provision of the Act or the rules made thereunder that there was nofailure without reasonable cause on the part of the assessee to file the return as required by Section 139(1). No provision of the Act or the rules has been brought to our notice by Mr. Ramachandra Rao in support of his contention that the Income-tax Officer, by his levying interest, must be deemed to have condoned the delay in filing the return of income. The taxing provisions have to be construed strictly. Hence, we are unable to agree with the submission of Mr. Ramachandra Rao. The sovereign Parliament is competent to levy interest under Clause (iii) of the proviso to Section 139(1) while extending time for any assessee to furnish his return of income and also penalty for failure without reasonable cause to file the return within the time prescribed under Section 139(1). There is no prohibition under the Constitution for Parliament to provide for charge of interest, levy of penalty and institution of prosecution for certain commissions or omissions or defaults on the part of the assessees. Where the Act has specifically provided for charge of interest as well as levy of penalty, the courts have to give effect to the same. We may notice in this context the following observations of the learned judge/Grover J., who spoke for the court, in Jain Brothers v. Union of India, : [1970]77ITR107(SC) wherein the imposition of double taxation was justified :

' It is not disputed that there can be double taxation if the legislature has distinctly enacted it. It is only when there are general words of taxation and they have to be interpreted, they cannot be so interpreted as to tax the subject twice over to the same tax ..... The Constitution doesnot contain any prohibition against double taxation even if it be assumed that such a taxation is involved in the case of a firm and its partners after the amendment of Section 23(5) by the Act of 1956. Nor is there any other enactment which interdicts such taxation ...... If any doubletaxation is involved the legislature itself has, in express words, sanctioned it. It is not open to any one thereafter to invoke the general principles that the subject cannot be taxed twice over.'

11. It is profitable to refer in this context to N. A. Malbary and Brothers v. Commissioner of Income-tax, : [1964]51ITR295(SC) wherein it has been held that the jurisdiction of the Income-tax Officer to pass a second order of penalty was not lost because he had omitted to recall the earlier order even though both the orders could not be enforced simultaneously.

12. In the light of the foregoing discussion, we express our inability to agree with Mr. Ramachandra Rao, counsel appearing for the assessee, that the Income-tax Officer is not empowered to levy penalty under Section 271(1)(a) when once he has levied interest under the provisions of Clause (iii) of the proviso to Sub-section (1) to Section 139(1). The decision of a Division Benchof this court in writ petition No. 1934/68 Kishan Lal Haricharan v. Income-tax Officer, : [1971]82ITR660(AP) dated March 5, 1970, relied upon by the assessee does not advance its plea as the facts of that case are distinguishable from those of the case on hand. As interest has been added by the Income-tax Officer, the assessee has raised this contention on the assumption that the Income-tax Officer must be deemed to have condoned the delay and extended the time for furnishing the return. The use of the word ' or' in Section 271(1)(a) makes it abundantly clear that any one of the ingredients specified therein would attract the penal provisions thereof. In the instant case admittedly the assessee has without reasonable cause failed to furnish the return of its total income on or before June 30, 1963, as required by Sub-section (1) to Section 139(1). This one circumstance itself is sufficient to attract the provisions of Section 271(1)(a). We are conscious of the fact that the reference relates to the levy of penalty under Section 271(1)(a). We are not flow concerned in this reference with the validity or otherwise of the addition of interest under Clause (iii) of the proviso to Section 139(1) as the assesseee did not challenge the same either before the Appellate Assistant Commissioner or the Tribunal. We have therefore to confine in this reference to the question whether the Income-tax Officer is competent in law to levy the penalty under Section 271(1)(a) on the facts and in the circumstances of the case. As observed earlier the assessee has a statutory duty and obligation to furnish its return of income without any notice by or action on the part of the Income-tax Officer. In the present case no return has been filed by the assessee on or before June 30, 1963, as required by Section 139(1) of the Act. Indisputably, the provisions of Clause (a) of Sub-section (1) to Section 271 are attracted as the aforesaid fact which is not in dispute is itself sufficient to attract the same. This view of ours gains support from the decision of a Division Bench of the Madras High Court in C. V. Govindarajulu Iyer v. Commissioner of Income-tax, [1948] 16 I.T.R. 391 (Mad.). Therein the assessee failed to furnish a return of his total income as required by a general notice issued under Section 22(1) of the Indian Income-tax Act, 1922. No notice under Section 22(2) was issued by the Income-tax Officer within the year of assessment. Pursuant to the notice under Section 34, a return of income was filed by the assessee within the time given by the officer. However, after completing the reassessment, the Income-tax Officer levied penalty under Section 28(1)(a) corresponding to Section 271(1)(a) of the present Act for failure without reasonable cause to furnish a return pursuant to the notice under Section 22(1). The contention advanced on behalf of the assessee that as there was no notice under Section 22(2) and no action was taken by the Income-tax Officer during the year of assessment, the general notice under Section 22(1) and the default committed by him in not filingthe return lapsed by the end of the year and hence no penalty could be levied under Section 28(1)(a) in the course of the reassessment proceedings, was rejected by the High Court. It was held therein that the assessment proceedings commenced with the general notice issued under Section 22(1) and where no order of assessment or an order declaring that no assessment could be made was made the proceedings initiated under Section 34 must be deemed to relate to the proceedings which commenced with the public notice under Section 22(1). The penalty in those circumstances was sustained for the failure of the assessee to file its return as required by the notice under Section 22(1) even though the assessee had furnished his return within the time given by the notice under Section 34.

13. It was held by a Division Bench of this court in K. P. Reddi v. Commissioner of Income-tax, [1968] 68 I.T.R. 638,645. 646 (A.P.) that the provisions of Section 28(1)(a) of the Indian Income-tax Act, 1922, are attracted where no return within the prescribed period has been filed by the assessee and such an assessee is liable for penalty in any proceedings the Income-tax Officer may initiate to assess his income be they on a notice under Section 28(2) or under Section 34. The learned judge, Jaganmohan Reddy C.J. (as he then was), who spoke for the court, observed thus :

' If a return has been filed, not in compliance with a notice under Section 22(1) but after the expiry of the period prescribed in that notice, the mere fact that the return has not been accepted or that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, does not preclude the Income-tax Officer from taking action under Section 28(1)(a), if he so chooses.'

14. In the present case it is found as a fact that the assessee did not furnish its return within the time given by the Income-tax Officer in his notice under Section 139(1). That apart, the request of the assessee for extension of time in its application dated September 16, 1963, and received by the Income-tax Officer on September 18, 1963, was only up to October 16, 1963. No return was filed until August 3, 1964. Judged from any angle we are clear in our minds that the provisions of Section 271(1)(a) are attracted in the instant case and the penalty has been rightly levied by the departmental authorities. On a careful examination of the provisions of Section 271(1)(a) read with the material provisions of Section 139(1), we are of the firm view that the Income-tax Officer was competent to levy a penalty under Section 271(1)(a) although he had levied interest under Clause (iii) of the proviso to Sub-section (1) of Section 139(1) as the intendment and purpose of both the imposts are different and distinct and they have been provided to meet different situations and contingencies. In our considered judgment both the penalty under Section 271(1)(a) and the interestunder Clause (iii) of the proviso to Sub-section (1) of Section 139(1) are exigible and there is no illegality or unconstitutionality in the same. 'For all the reasons, our answer to question No. 2 is in the negative and to question No. 3 in the affirmative and against the assessee.

15. We shall now advert to question No. 4. Section 139(1) permits any person to furnish the return of his income for any previous year at any time before the assessment is made but, however, he is made liable to pay interest from the date on which the return ought to have been filed under Section 139(1) to the actual date of the furnishing of the return. The mere fact that a return is permitted to be filed before the assessment is made or a revised return under Sub-section (5) of Section 139(1) could be filed at any time before the assessment is made, will not absolve such an assessee from the levy of penalty under Clause (a) of Sub-section (1) to Section 271. Section 271(1)(a) is attracted the moment the ingredients of that provision are established. The very provisions of Sub-section (4) will come into play only when no return has been furnished by the assessee within the time permitted under Sub-section (1) or within the time granted to him under Sub-section (2) of Section 139(1). If no return was fifed as required under Sub-section (1) of Section 139(1) or within the time permitted by notice under Sub-section (2) to Section 139(1) or Section 148, penalty can be levied by the Income-tax Officer under Section 271(1)(a). On a reading of the provisions of Section 271(1)(a) and Sub-section (4) of Section 139(1), we are satisfied that the assessee cannot claim that it is not open to the assessee to contend that there was no default in furnishing the return of its income as required by Sub-section (1) to Section 139(1) or by notice given under subsection (2) to Section 139(1). This question has been decided in R.C. No. 71 of 1968, Poorna Biscuit Factory v. Commissioner of Income-tax (Unreported.) dated February 19, 1971, by a Division Bench of this court of which one of us (myself) was a party. Therein it was observed thus :

' The mere fact that the law gives him a further chance to file a return under Section 139(1) does not absolve him from his liability to be penalised under Section 271(1)(a) for the defaults he has already committed. The penalty is for failure without reasonable cause to file the return or for filing it beyond the time allowed under Section 139(1) or 139(4) of the Act. The penal interest is, however, levied as compensation to the Government for the interest that it would have earned had the return been filed in time and the assessment made on the basis of that return,'

16. For all the reasons stated, our answer to question No. 4 is in the affirmative and in favour of the Government.

17. The assessee shall pay the costs of this reference. Advocate's fee, Rs. 300.


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