Return-filing duty for registered firms arises only when income exceeds the statutory threshold; penalty cannot enlarge that obligation.

A registered firm was not liable to penalty for failure to file a return where its total income, as finally determined, did not exceed the maximum amount not chargeable to income-tax. Section 22(1) imposed the return-filing duty only on persons whose income crossed the statutory threshold, and provisions governing firm assessment or penalty computation could not expand that duty. The later issue of the registration certificate did not postpone registration for the relevant assessment year; registration operated for that year and governed the filing obligation. On that basis, no statutory obligation to file arose and penalty under Section 28(1)(a) was not leviable, with the question answered for the assessee.

---

---

Issues: Whether a registered firm whose total income did not exceed the maximum amount not chargeable to income-tax was liable to penalty under Section 28(1)(a) of the Indian Income-tax Act, 1922, for failure to furnish a return under Section 22(1), and whether the date of issue of the registration certificate postponed the effect of registration for the relevant assessment years.

Analysis: Section 22(1) obliged only a person whose total income during the previous year exceeded the maximum amount not chargeable to income-tax to furnish a return. For a registered firm, the relevant threshold was the amount applicable to such a firm, and if the income, as finally determined, did not exceed that limit, no statutory obligation to file a return arose. The provisions relating to assessment of firms and the computation of penalty were treated as machinery provisions governing assessment and quantification, and they could not enlarge the class of persons made liable by Section 22(1). The registration certificate, though issued later, operated for the assessment year and governed the return-filing obligation for that year.

Conclusion: The firm was under no obligation to file a return under Section 22(1), and therefore penalty under Section 28(1)(a) was not leviable. The answer to the referred question was in the affirmative in favour of the assessee and against the Revenue.

Ratio Decidendi: Penalty for failure to furnish a return can be imposed only where Section 22(1) creates a clear statutory duty to file that return, and provisions relating to assessment mechanics or quantification of penalty cannot create that duty.

---