Law:

Section:

Section 271(1)(a), read with sections 271(2) and 271(3)(a) of the Income-tax Act, 1961 – Penalty – For late filing of return – Assessment year 1962-63 – Whether provision of section 271(3)(a) has application only to a case where there has been a failure to submit a return in accordance with provisions of section 139(1) and, it has no application to case of a delayed return - Held, yes – Assessee-firm was not granted registration but was treated as registered firm under section 183(b) – Penalty under section 271(1)(a) was imposed on assessee for late filing of return – Whether assessee could be subjected to levy of penalty as if it were an unregistered firm for purpose of levy of penalty - Held, yes FACTS For the assessment year 1962-63, there was delay in filing the return of income by the assessee firm. The assessee applied for registration which was not allowed. The ITO determined the total income of the assessee by treating it as registered firm under section 183(b). Subsequently, the ITO levied penalty under section 271(1)(a). On appeal, the AAC reduced the penalty to 10 per cent of the tax payable. On Revenue's appeal, the assessee raised additional grounds stating that the assessee having been treated as a registered firm under section 183(b) no penalty was leviable under section 271(1)(a) and that no tax having been found to be payable by the assessee which was assessed under section 183(b), the penalty imposable as proportion of the tax would be nil. The Tribunal rejected these contentions and held that the assessee was an unregistered firm treated as a registered firm only for the purpose of section 183(b) and that for the purpose of liability to penalty, the assessee should be treated as an unregistered firm. It, therefore, allowed the appeal of the department and confirmed the levy of penalty as made by the ITO. On reference: HELD The provision in section 183(b ) is an enabling provision for the purpose of making an assessment on an unregistered firm as if it were a registered firm if the ITO was of the opinion that the tax effect would be greater if it were so assessed as a registered firm. The object of the provision is to see that there is no…

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