Late filing penalty remains leviable despite later tax payment, because the statutory default is complete when the return is not filed on time.

Penalty under section 271(1)(a) for failure to furnish a return within time was held leviable even though the assessed tax had been paid before the penalty order and no tax remained outstanding on that date. The court treated the default as complete once the return was not filed within time, and held that later payment after assessment and demand did not erase the earlier statutory breach. The computation of penalty was governed by the assessed tax and the demand under section 156, so the subsequent discharge of liability did not defeat the penalty.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable when the assessee had paid the assessed tax before the date of imposition of penalty and no tax liability remained outstanding on that date.

Analysis: The default penalised under section 271(1)(a) was the failure to furnish the return within time. The provision imposed penalty with reference to the tax, if any, payable in the case of such default, and the subsequent payment of tax after assessment and demand did not wipe out the earlier default. The court held that the demand under section 156 and the concept of assessed tax governed the computation, and that the later discharge of tax liability did not prevent levy of penalty for a completed default. No ambiguity was found in the language of the provision that would justify adopting a construction in favour of the assessee.

Conclusion: Penalty was rightly leviable notwithstanding that the tax had been paid before the penalty order was passed; the answer was against the assessee and in favour of the Revenue.

Ratio Decidendi: Payment of tax after the statutory default has been committed and after assessment or demand does not bar penalty for failure to file the return within time under section 271(1)(a) of the Income-tax Act, 1961.

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