1. This is an assessee's appeal against imposition of penalty under Section 271(1)(a) of the Income-tax Act, 1961 ('the Act'). The assessee is a registered firm and the assessment year in question is 1978-79.
The assessee was bound to file its return on 30-6-1978, which it actually filed on 30-9-1978. The ITO levied a penalty of Rs. 1,300 for three months' default in the submission of the return as he was satisfied that the assessee had, without reasonable cause, failed to furnish the return within time. The assessee had actually not shown any cause for not filing the return in time and it had merely submitted that no penalty can be imposed on it as no tax was payable.
2. The assessee appealed to the AAC. The only contention raised before the AAC was that, after adjusting the advance tax and the tax deducted at source, no tax was due from the assessee. On the other hand, the assessment resulted in refund and, therefore, no penalty could be levied. The learned AAC negatived this contention but holding that the delay in filing the return was only of two completed months, he reduced the penalty by Rs. 433. Feeling aggrieved, the assessee has preferred this appeal.
3. We have heard the learned Counsel for the assessee and the learned departmental representative and have carefully gone through the record.
The finding of the ITO that the assessee had failed, without reasonable cause, to furnish the return of income within time, was not challenged on behalf of the assessee. It is also a fact that, after adjustment of the tax ded ucted at source and the advance tax paid by the assessee, there was no demand against the assessee and actually a refund was due to it.
(1) 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 (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,--(i) in the cases referred to in Clause (a),-- (a) in the case of a person referred to in Sub-section (4A) of Section 139, where the total income in respect of which he is assessable as a representative assessee does not exceed the maximum amount which is not chargeable to income-tax, a sum not exceeding one per cent of the total income computed under this Act without giving effect to the provisions of Sections 11 and 12, for each year or part thereof during which the default continued; (b) in any other case, in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent of the assessed tax for every month during which the default continued.
Explanation: In this clause 'assessed tax' means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C; (2) When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, then, notwithstanding anything contained in the other provisions of this Act, the penalty imposable under Sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.
5. The assessee contended that no penalty can be imposed on it as no tax was payable and placed reliance on two judgments of the Gauhati High Court in CIT v. Maskara Tea Estate  130 ITR 955 and CIT v.Ganesh Das Sreeram (Firm)  141 ITR 946. The subsequent ruling simply follows the earlier one in Maskara Tea Estate''s case (supra).
In these cases, the Hon'ble Gauhati High Court interpreted the various clauses of Section 271 with reference to Section 271(2) and it held that, under Section 271(1)(a), a person is liable to penalty if he commits double defaults--(i) fails to submit return without reasonable cause, etc., and (ii) does not pay up his tax in the manner provided in Section 271(1)(a). It held that a person who has had no arrears of taxes and has duly paid up his assessed tax in advance under Chapter XVII-C of the Act, is exempted by law from paying any penalty and he is not liable to penalty. In this view of the matter, the Hon'ble Gauhati High Court held that if a registered firm has not rendered itself liable to penalty by being not a defaulter in payment of tax, Section 271(2) would not come into play. The learned Counsel for the assessee also relied upon a single member judgment of this Bench in the assessee's own case for the assessment year 1976-77 in which, following the ruling in Maskara Tea Estate's case (supra), the penalty for that year was cancelled. The learned departmental representative, on the other hand, relied upon the rulings of the Gujarat and Calcutta High Courts in CIT v. R. Ochhavlal & Co.  105 ITR 518 and CIT v. Priya Gopal Bishoyee  127 ITR 778, respectively. The Hon'ble Gujarat High Court held that Clauses (a), (b) and (c) of Section 271(1) deal with different kinds of default and where a registered firm failed to furnish its return in time, it was liable to penalty even if as a registered firm no tax was due from it. It was held that penalty was leviable on a registered firm in the same manner as it would be leviable on an unregistered firm because of the provisions of Section 271(2). Similar view was taken by the Hon'ble Calcutta High Court, which conclu ded that the fact is that payment of assessed tax on the basis of a registered firm would not exonerate the assessee from the imposition of penalty on the basis that it was an unregistered firm calculating the default for the month for which the default had continued. In coming to the aforesaid conclusion, the Hon'ble Gujarat High Court had also placed reliance on a ruling of the Hon'ble Supreme Court in CIT v. S.V. Angidi Chettiar  44 ITR 739, in which, interpreting identical provisions under the Indian Income-tax Act, 1922 ('the 1922 Act'), the Hon'ble Supreme Court held that penalty could be levied on a registered firm for not filing its return although a registered firm by itself was not liable to pay any tax. Thus, while one High Court, viz., the Gauhati High Gourt, has taken the view favourable to the assessee, the two High Courts, viz., the Calcutta and the Gujarat High Courts have taken the view against the assessee and held that penalty was leviable on a registered firm even if all the tax leviable on it had been paid in advance. The judgment of the Hon'ble Supreme Court in S.V. Angidi Chettiar's case (supra) was not considered in the Gauhati High Court rulings.
6. Sub-section (1)(a) of Section 271 provides that an assessee, who without reasonable cause, fails to furnish a return, is liable to pay penalty. Item (b) of Section 271(1)(a)(i) provides for the quantification of the amount of penalty and it says that the assessee shall pay, in addition to the amount of tax, if any, payable by him, a sum equal to two per cent of the assessed tax for every month during which the default continued. The provisions of item (b) and the use of the words 'if any' would indicate that liability to pay tax is not a pre-condition for imposition of penalty against a person who fails to furnish his return, which he is bound to furnish. Sub-section (2) of Section 271 provides that when the person liable to penalty is a registered firm ..., then, notwithstanding anything contained in the other provisions of this Act, the penalty imposable under Sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm. No doubt, where, on an assessment, no tax is found due from an assessee, the quantification of penalty would become impossible and no penalty can be levied. In the case of a registered firm, however, by the fiction created by Sub-section (2), the firm has to be treated as unregistered and it can be exempted from penalty only if, even by calculating the tax on it as an unregis tered firm, no tax is found due from it. Such is not the case before us, In our opinion, the views taken by the Hon'ble Gujarat and the Calcutta High Courts are preferable because they are more in consonance with the patent words of Section 271, while the view taken by the Gauhati High Court is based on an interpretation by reading into Sub-section (1) of Section 271 something which is not there. Further, the import of the words 'if any' with reference to the amount of tax payabl e by an assessee used in Sub-section (1)(a)(i)(b) of Section 271 has not been considered in the Gauhati High Court rulings. These words clearly indicate that the liability to penalty can arise even if no tax is payable by a person.
7. As regards the fact that, for the assessment year 1976-77, a single Member of this Bench followed the decision of the Gauhati High Court in Maskara Tea Estate's case (supra) in the assessee's own case, we feel that it does not operate as an estoppel or res judicata and since the judgment is short and the rulings of the Gujarat and Calcutta High Courts do not appear to have been cited before the learne d member, we are unable to fall in line with him.