Delayed return penalty under income tax law not leviable where tax liability was already discharged through TDS or advance tax.

A delayed return by a registered firm did not attract penalty under section 271(1)(a) of the Income-tax Act, 1961 where the firm's tax liability had already been substantially or fully discharged through tax deducted at source or advance tax. Because the deducted tax exceeded the amount due and the assessee was in a refund position, the legal basis for penalty under section 271(1)(a)(i)(b) was treated as absent. The questions were answered in favour of the assessee and against the Revenue.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable on a registered firm whose return was delayed but whose tax liability had already been substantially or fully met through tax deducted at source or advance payment.

Analysis: The return was filed beyond the prescribed time, but the tax deducted at source exceeded the amount due from the assessee, leaving the assessee entitled to refund. In the light of the earlier reference on the same legal question, it was held that where the entire tax liability has already been discharged by deduction at source or advance payment, the foundation for imposing penalty under section 271(1)(a)(i)(b) does not survive.

Conclusion: Penalty was not leviable, and the questions referred were answered in favour of the assessee and against the Revenue.

Ratio Decidendi: Where a registered firm's tax liability has already been discharged through tax deducted at source or advance tax, delayed filing of the return does not justify penalty under section 271(1)(a) of the Income-tax Act, 1961.

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