Continuing default in return filing supports penalty under the 1961 income-tax scheme, with monthly quantification applied.

Penalty under section 271(1)(a) of the Income-tax Act, 1961 applies where the return and assessment occur after 1 April 1962, even if the assessment year is 1961-62, because liability is linked to the continuing failure to furnish the return and the completion of assessment under the 1961 scheme. The provision quantifies penalty by reference to each month of default, treating non-filing as a continuing default rather than a one-time lapse on the due date. Article 20(1) does not bar application of the later Act on these facts, as the penalty under the earlier law could have been higher than the amount imposed under the 1961 Act.

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Issues: Whether penalty for failure to file the return within time, where the return and assessment occurred after the commencement of the Income-tax Act, 1961, was properly leviable under section 271(1)(a) of that Act and whether the default was a continuing default for purposes of quantifying the penalty.

Analysis: The relevant assessment year was 1961-62, but the return was filed and the assessment was completed after 1 April 1962, bringing the case within the penalty scheme of the 1961 Act. The statutory scheme of section 271(1)(a), read with section 297(2), shows that the liability for penalty is linked to the completion of assessment and to the continuing non-compliance with the obligation to furnish the return. The provision fixes the penalty by reference to each month during which the default continues, which indicates a legislative treatment of the failure as a continuing default rather than a completed wrong confined to the due date alone. Article 20(1) was held not to bar application of the 1961 Act because the amount leviable under the earlier law could, on the facts, have been greater than the penalty imposed under the later law.

Conclusion: The penalty was rightly imposed under section 271(1)(a) of the Income-tax Act, 1961, and the default was a continuing default for quantification purposes.

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