Automatic interest under amended return-filing rules does not prevent penalty, and time extension alone is no defence.

Under the amended section 139 of the Income-tax Act, automatic levy of interest did not bar the simultaneous imposition of penalty for failure to comply with filing requirements. The Court distinguished earlier authorities cited by the assessee because they arose under different statutory settings and earlier assessment years. It also held that extension of time granted by the assessing authority, by itself, did not create any presumption against penalty. The challenge to the penalty therefore failed, and the revisionary confirmation of the levy was upheld.

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Issues: Whether the levy of penalty under section 271(1)(a) of the Income-tax Act, 1961, as confirmed in revision under section 264, was liable to be interfered with in view of the amended section 139 and the extension of time granted by the assessing authority.

Analysis: The assessment year was 1981-82, and the amended section 139, introduced by the Taxation Laws (Amendment) Act, 1970 with effect from 1 April 1971, applied. Under the amended provision, levy of interest was automatic. The authorities relied upon on behalf of the petitioner were distinguished as relating to different statutory settings and earlier assessment years. The Court held that interest is not penal in nature and that, in appropriate cases, interest may be levied in addition to penalty. The mere fact that time had been extended did not create a presumption against the levy of penalty.

Conclusion: The challenge to the penalty failed and the levy confirmed in revision was upheld.

Final Conclusion: The writ petition was dismissed, leaving the penalty intact.

Ratio Decidendi: Under the amended section 139, automatic levy of interest does not preclude the simultaneous imposition of penalty for default, and extension of time by itself does not bar penalty.

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