Penalty for return-filing default remains leviable despite notice under section 139(2), following binding High Court precedent.

Service of notice under section 139(2) of the Income-tax Act, 1961 does not bar penalty for default in filing the return under section 139(1). The issue was treated as a pure question of law and was governed by the Full Bench view of the same High Court, which had already held that penalty remained leviable notwithstanding service of notice under section 139(2). Applying that binding precedent, the Tribunal's contrary view was found incorrect and the question was answered in favour of the Revenue.

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Issues: Whether, after service of notice under section 139(2) of the Income-tax Act, 1961, penalty could still be imposed for default under section 139(1) of the Income-tax Act, 1961.

Analysis: The issue was a pure question of law and was covered by the Full Bench decision of the same court, which held that penalty was leviable for the default in filing the return notwithstanding the service of notice under section 139(2). Applying that binding view, the Tribunal's contrary conclusion was held to be incorrect.

Conclusion: The question was answered in the affirmative, and the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: Service of notice under section 139(2) does not bar imposition of penalty for default under section 139(1) of the Income-tax Act, 1961.

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