Presumption of valid extension of return filing time can support interest charge and defeat penalty for delayed filing.

Interest under the third proviso to section 139(1) is chargeable only where the return-filing time has been extended on the assessee's application, and the presumption that official acts are regularly performed may justify inferring such an extension from the record. On that basis, late filing is treated as within the extended time and penalty under section 271(1)(a) does not survive. The stated ratio is that a valid extension may be presumed where the facts support regularity of official action, and penalty for delay cannot be sustained once that extension is accepted.

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Issues: (i) Whether, for charging interest under the third proviso to section 139(1) of the Income-tax Act, 1961, it could be presumed that the assessee had applied for extension of time and that such extension had been granted. (ii) Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable for late filing of the return.

Issue (i): Whether, for charging interest under the third proviso to section 139(1) of the Income-tax Act, 1961, it could be presumed that the assessee had applied for extension of time and that such extension had been granted.

Analysis: Interest under the third proviso to section 139(1) was payable only where the Income-tax Officer, on the assessee's application, extended the time for furnishing the return. As the records did not clearly disclose the exact state of facts, the Tribunal drew a presumption that official acts had been regularly performed and inferred that an application had been made and time had been extended. That inference was treated as justified.

Conclusion: The presumption of extension of time was upheld.

Issue (ii): Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable for late filing of the return.

Analysis: Once it was accepted that the return had been furnished pursuant to an extension of time, the basis for treating the default as one attracting penalty under section 271(1)(a) did not survive. On that footing, the Tribunal held that penalty was not leviable.

Conclusion: Penalty under section 271(1)(a) was not leviable.

Final Conclusion: The reference was answered in favour of the assessee, with the Revenue failing on both the interest and penalty questions.

Ratio Decidendi: Where the facts necessary to support charging interest indicate that official acts must have been regularly performed, a presumption of valid extension of time may be drawn, and penalty for delayed filing cannot be sustained once such extension is accepted.

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