Delayed return within extended filing time does not avoid penalty where default is under section 271(1)(a).

A return filed after the time prescribed under section 139(1), even if within section 139(4), does not cure default for penalty purposes under section 271(1)(a). The Court held that section 271(1)(a) applies only to failures in filing returns required under section 139(1) or section 139(2), and that extending Kulu Valley Transport Co. P. Ltd. to penalty proceedings would wrongly render part of the provision redundant. The return filed under section 139(4) therefore did not protect the assessee from penalty, and the Tribunal's contrary view was rejected.

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Issues: Whether a return filed beyond the time prescribed under section 139(1) but within the time allowed under section 139(4) of the Income-tax Act, 1961, precludes levy of penalty under section 271(1)(a) by reason of the principle stated in Kulu Valley Transport Co. P. Ltd.

Analysis: The Court held that the language of section 271(1)(a) is confined to defaults in filing returns required under section 139(1) or section 139(2) and cannot be extended to returns filed under section 139(4). Extending the principle of Kulu Valley to penalty proceedings would make part of section 271(1)(a) redundant and otiose, which is contrary to settled rules of statutory construction. The Court also accepted the reasoning of several High Courts that Kulu Valley was decided in a different context and could not govern penalty liability for delayed filing.

Conclusion: The return filed under section 139(4) did not save the assessee from penalty under section 271(1)(a), and the Tribunal was wrong in holding otherwise.

Final Conclusion: The reference was answered against the assessee and the penalty under section 271(1)(a) was held to be legally maintainable.

Ratio Decidendi: A return filed within the extended time allowed by section 139(4) does not amount to compliance with section 139(1) or section 139(2) for the purpose of avoiding penalty under section 271(1)(a).

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