Law:

Section:

Section 271(1)(a) read with section 139 of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1964-65 - Whether where there was delay in furnishing return, even though return was filed before completion of assessment, penalty under section 271(1)(a) could be imposed on assessee - Held, yes - Whether once a default is committed under section 139(1), subsequent service of notice under section 139(2) would not make any difference to date of imposition of penalty under section 271(1)(a) which would be reckoned from date on which return became due under section 139(1) - Held, yes FACTS For the relevant assessment year the return of income was due to be filed under section 139(1) by 30-6-1964. A notice under section 139(2) was served on 13-7-1964, under which the return was due to be filed in August, 1964. The return was filed only on 27-10-1965. Hence, the ITO initiated action for penalty under section 271(1)(a). The ITO did not accept the assessee's contention that since the return had ultimately been filed before the completion of assessment no penalty could be imposed. The ITO also stated that even after the service of notice under section 139(2) the assessee continued to make default and accordingly, he imposed penalty. The assessee lost both before the AAC and the Tribunal. On reference: HELD The Tribunal was justified in holding that penalty under section 271(1)(a ) could be imposed on the assessee for delay in furnishing return, even though the return was filed before completion of assessment. As regards quantum of penalty, once a default is committed under section 139(1), the fact that a notice under section 139(2) has been served would not make any difference to the date of imposition of penalty, namely, the date of default under section 139(1). It is to be noted that an ITO, before he makes a best assessment under section 144, is bound to give a notice under section 139(2). An assessee cannot, therefore, be allowed to wait till a notice is given under section 139(2) and escape the consequences of penalty imposable under section 271(1)(a). In view of this, the Tribunal was justified in holding that the period of the default for…

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