1972 (9) TMI 152 - AT - Income Tax

Tax Tribunal: Timely Filing Rules & Penalties Clarified

Third Income-Tax Officer Versus Indian Rubber & Plastic Co.

The Tribunal held that a return filed under section 139(4) could not be considered as filed within the time allowed under section 139(1) to avoid penalty ... - Issues Involved:1. Whether a return filed under section 139(4) could be treated as a return within the time allowed under section 139(1) to avoid the levy of penalty under section 271(1)(a).2. Whether the charging of interest under section 139(4) in the manner laid down in section 139(1) extended the time for submission of the return to avoid the levy of penalty under section 271(1)(a).3. Whether the levy of penalty under section 273(b) was a bar to the levy of penalty under section 271(1)(a).Detailed Analysis:1. Whether a return filed under section 139(4) could be treated as a return within the time allowed under section 139(1) to avoid the levy of penalty under section 271(1)(a):The Tribunal examined the provisions of the 1922 Act and the amendments made in 1939 and 1953. Under the 1922 Act, section 22(3) allowed an assessee to file a return before the assessment was made, which was deemed to be a return made in due time. However, the amendment in 1939 omitted the words that equated such returns to those filed within the time allowed under the law. The Supreme Court in Kulu Valley Transport Co. (P.) Ltd. held that a return filed under section 22(3) was valid and within time for computing loss. However, the Tribunal noted that the Supreme Court did not address the issue of penalty under section 271(1)(a). The Tribunal concluded that a return filed under section 139(4) should be treated as having been filed after the time limit specified in section 139(1), and thus, the assessee failed to furnish the return within the time allowed, attracting penalty under section 271(1)(a).2. Whether the charging of interest under section 139(4) in the manner laid down in section 139(1) extended the time for submission of the return to avoid the levy of penalty under section 271(1)(a):The Tribunal analyzed section 139(4) and the proviso to section 139(1). It was noted that section 139(4) allows a return to be filed before the assessment is made, but it does not extend the time limit for filing the return. The closing words of section 139(4) attract the liability to interest but do not extend the time limit as if an application for extension was made and granted. The Tribunal held that the charging of interest under section 139(4) does not deprive the Income-tax Officer (ITO) of the right to levy penalty under section 271(1)(a).3. Whether the levy of penalty under section 273(b) was a bar to the levy of penalty under section 271(1)(a):The Tribunal noted that section 273(b) applies to the failure to furnish an estimate of advance tax, while section 271(1)(a) deals with the failure to furnish the return within the time allowed. These are distinct and separate offences committed at different times. The Tribunal held that the levy of penalty under section 273(b) does not affect the power to levy penalty under section 271(1)(a).Conclusion:The Tribunal concluded that the return filed under section 139(4) could not be treated as a return within the time allowed under section 139(1) to avoid the levy of penalty under section 271(1)(a). The charging of interest under section 139(4) did not extend the time for submission of the return, and the levy of penalty under section 273(b) was not a bar to the levy of penalty under section 271(1)(a). The appeal was partly allowed, directing the ITO to examine the quantum of penalty in light of relevant decisions.