Extension of filing time by interest levy defeated penalty reference for late return filing under the Income-tax Act.

Levy of interest under section 139 of the Income-tax Act was treated as implying extension of time to the date of filing the return, so the basis for penalty under section 271(1)(a) for delay in furnishing the return ceased to survive. On that agreed legal position, a reference confined to the penalty question was held to be unnecessary and meaningless in isolation. The proposed reference was therefore rejected and the appeals were dismissed.

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Issues: Whether, in view of the settled position that levy of interest under section 139 of the Income-tax Act, 1961 implied grant of time up to the date of filing of the return, the question of reference on penalty under section 271(1)(a) survived for consideration.

Analysis: The agreed position between the parties was that the answer to the first question was against the Revenue and in favour of the assessee on the authority applied by the Court. Once the Income-tax Officer was deemed to have granted time up to the date of filing of the return, the basis for levy of penalty for failure to furnish the return within time did not survive. In that situation, attempting to refer the third question in isolation was held to be meaningless.

Conclusion: The proposed reference was unnecessary and the appeals were dismissed.

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