Penalty for failure to file a return under the original filing obligation was sustained despite a later reassessment return.

Penalty under section 271(1)(c) is examined by reference to the original obligation to file a return under section 139(1). Where an assessee had taxable income but failed to furnish the return within time, Explanation 3 applies and the default is not cured by filing a return later in response to notice under section 148. The subsequent reassessment return does not undo the earlier omission for that assessment year. On that basis, the penalty was held to be correctly sustained against the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee did not file a return under section 139(1) despite having taxable income and the assessment was completed pursuant to notice under section 148.

Analysis: Penalty under section 271(1)(c) is examined with reference to the original return of income. Where an assessee having taxable income fails to furnish the return under section 139(1), the omission attracts the deeming fiction contained in Explanation 3 to section 271(1)(c). The subsequent filing of a return in response to notice under section 148 does not undo the earlier default for the relevant assessment year. On that basis, the levy of penalty was held to be justified.

Conclusion: The penalty under section 271(1)(c) was rightly sustained and the issue was decided against the assessee.

Final Conclusion: The appeal failed, and the penalty order as affirmed in appeal remained undisturbed.

Ratio Decidendi: For purposes of section 271(1)(c), concealment is tested against the original obligation to file the return under section 139(1), and failure to do so despite taxable income attracts Explanation 3 notwithstanding a later return filed in response to reassessment proceedings.

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