Law: Income Tax Act, 1922

Section: 28

Law: Income Tax Act, 1961

Section: 271(1)(a)

(a) Income-tax Act (XI of 1922)---S. 28--Assessment year 1961-62--Filing of return due on 28-9-1962-­Delay in filing return is continuing offence--Penalty is leviable under S.28--A I R 1981 S C 1106 held no longer good law in view of A I R 1977 S C 778. The year of assessment of assessee was 1961-62. The return was due by 28-9-1961 but it was neither filed within time nor was any extension asked for. The assessee filed the return on May 3, 1962 beyond more than seven months of the due date. With effect from April 1, 1962, the Income-tax Act of 1961 had come into force. The Income-tax Officer took proceedings under section 27(1)(a) of the 1961 Act and imposed a penalty of Rs.4,060 as prescribed thereunder for failure to furnish the return within the time on a finding that the assessee had not been prevented by any reasonable cause for not complying with the statutory obligation to make the return. The assessee challenged the imposition of penalty by preferring an appeal to the Appellate Assistant Commissioner who refused to interfere and dismissed the appeal. On further appeal, the Appellate Tribunal held that penalty was leviable under the 1961 Act but the amount of penalty had to be quantified according to the provisions of section 28 of the Income-tax Act, 1922. Applying the provisions of the 1922 Act, the Tribunal reduced the ­penalty to Rs.400. Held, that though the default occurred in September 1961 the date relevant for the purpose of initiating proceedings for imposition of penalty is when, following the assessment made, the Income-tax ,Officer decided to initiate penalty proceedings and the proper provision to apply for dealing with the situation relating to penalty is as provided in section 271(1)(a) of the 1961 Act. Consequently, the Tribunal was not justified in reducing the penalty to a 'figure lower than that was leviable under section 271(1)(a). The accrual of penalty depends upon the terms of the statute imposing it and in view of the language used in section 271(1)(a) of the 1961 Act, the position is beyond dispute that the Legislature intended to deem the non-filing of the return to be a continuing default--the wrong for which penalty is to be…

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