R. M. Sahai, J. - The following questions have been referred for the opinion of this court :
1. 'Whether on the facts and in the circumstances of the case a penalty under Section 271(1)(a) is precluded by virtue of the charging of interest under section 139
2. Whether the ratio laid down by the Supreme Court in the case of Kulu Valley Transport Co. is properly distinguished by the Tribunal ?'
The assessee, a firm, filed its return 4th January, 1967 in response to a notice under section 148 dated June, 1966. The return was due to be filed on 30th September, 1963. There was thus a delay of 41 months. The Income-Tax Officer issued a notice under section 271(1)(a) of the Income-Tax Act to show cause why penalty be not levied for the late filling to the return. The assessee submitted its explanation alleging mainly that its Munim was a patient of paralysis and the account could not be completed within time. The explanation was not accepted and the penalty was levied.
2. Mr. Mahajan, learned counsel for the assessee, has urged that in a case where interest has been charged under section 139, no penalty can be levied under section 271(1)(a).
3. Under section 139, the levy of interest is automatic, if there is delay in filling the return whereas levy of penalty depends on conditions mentioned in section 271. Interest is compensation for the delayed payment, whereas penalty is the punitive levy for blame worthy conduct of the assessee. The argument that merely because the interest has been charged the levy of penalty is precluded, does not appear to be correct.
4. The Second question referred to us is covered by a decision of this court reported in Addl. Commissioner of Income-Tax vs. Seth Devi Chand and sons, Saharanpur (1976 U.P. Tax Cases 407 : 1976 CTR (All.) 257). Mr. Mahajan appearing for the assessee has frankly brought to our notice two decisions reported in T. Venkata Krishnaiah and Co. vs. Commissioner of Income-Tax, A.P. (93 I.T.R. 297) and Narandas Parmanand Das vs. Income-tax Officer & others (98 I.T.R. 453). He has not been able to persuade us that there is any good ground for not following the principles laid down in these decisions.
5. In view of what we have stated above we answer the first question in the negative and the second question in the affirmative, both against the assessee and in favour of the Department.
The answers are as follows :
'1. In the facts and circumstances of the case penalty u/s. 271(1)(a) is not precluded by virtue of the charging of interest u/s. 139.
2. The Tribunal was justified in distinguishing the case of Kulu Valley Transport Co. in the facts and circumstances of the case.'
6. The Department shall be entitled to its costs which we assess at Rs. 200/-.