Law: Income Tax Act, 1961

Section: 139(1),(2),(4),271(1)(a)

Income-Tax---Penalty---Penalty for delay in filing return---Default under S.139(1) ceases only on filing of return in answer to notice under S.139(2) or under S.139(4)---Default not wiped out on notice being issued under S.139(2)--¬Once default commences under S 139(1) it continues until return is filed or assessment is made---Levy of penalty valid in both cases---Indian Income Tax Act, 1961, Ss.139(1), (2), (4) & 271(1)(a)---[CIT (Addl.) v. Rampratap Shankalal (1979) 117 ITR 662 (MP) dissented from]. A default made under section 139(1) of the Income Tax Act, 1961, ceases only on the filing of the return in answer to a notice under section 139(2) or under section 139(4) and this default is neither arrested nor wiped out on notice being issued under section 139(2) and it attracts levy of penalty under action 271(1)(a) in both cases. The reason is that once the default commences under section 139(1) it continues till the return is filed by the assessee or the assessment is made by the Income-tax Officer. It does not go with the issuance of notice under section 139(2). If that was so, it would put a premium on the default made by the assessee who would sit comfortably without inviting any penalty till a notice was issued to him under section 139(2). By that logic a wilful default under section 139(1) would go unpunished even though section 271(1)(a) provided penalty for it. Chunnilal & Bros. v. CIT (1979) 119 ITR 199 (MP); CIT v. Indra & Co. (1971) 79 ITR 702 (Raj.); CIT v. Hindustan Industrial Corporation (1972) 86 ITR 657 (Delhi); CIT (Addl.) v. Seth Devi Chand and Sons (1978) 111 ITR 724 (All.) and Mullapudi Venkatarayudu v. Union of India (1975) 99 ITR 448 (AP) fol. CIT (Addl.) v. Rampratap Shankarlal (1979) 117 ITR 662 (MP) dissented from. JUDGMENT B.A. KHAN, J.---This reference has been made by the Income-tax Tribunal at the instance of the assessee under section 256(1) of the Income Tax Act, 1961, soliciting our opinion on the following stated question: "Whether, on the facts and in the circumstances of the case, the Tribunal erred in upholding the penalty for delay in furnishing the The deceptive formulation of the question notwithstanding,…

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