Late income-tax return did not cure penalty default where statute expressly penalised failure to file within notice time.

Failure to file a return within the time allowed by notice under section 22(2) of the Indian Income-tax Act, 1922 remained a penal default under section 28 where no reasonable cause was shown. A return filed later within the period permitted by section 22(3) did not cure that default for penalty purposes, because section 22(3) operated in the assessment context and did not override the express language of the penalty provision. The principle in Kulu Valley Transport Co. was confined to assessment and could not be extended to defeat section 28. The assessee was therefore liable to penalty, and the referred question was answered against the assessee.

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Issues: Whether an assessee who failed without reasonable cause to file a return within the time allowed by notice under section 22(2) of the Indian Income-tax Act, 1922 could avoid penalty under section 28 of that Act because a return was later filed within the time permitted by section 22(3).

Analysis: Section 22(2) prescribed the time allowed by notice for filing the return, and section 28 made failure to furnish the return within that time, without reasonable cause, a penal default. Section 22(3) enabled a return or revised return to be filed before assessment, but that facility governed assessment and did not override the express penalty language in section 28. The principle stated in Kulu Valley Transport Co. was confined to the assessment context and could not be extended to defeat the express operation of the penalty provision.

Conclusion: The assessee remained liable to penalty under section 28 despite the later return, and the answer to the referred question was in the negative and against the assessee.

Ratio Decidendi: Where a statute expressly penalises failure to furnish a return within the time allowed by a notice, a later return filed before assessment does not nullify the default for penalty purposes unless the statute itself provides such relief.

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