TaxTMI 
TaxTMI 
1971 (10) TMI 16
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioner to show cause why penalty should not be levied in respect of the assessment year 1963-64, for submission of late returns, without sufficient cause. The petitioner sought to explain, but apparently his explanation was not accepted and the result was the Income-tax Officer by an order dated May 25, 1966, levied a penalty of Rs. 3,130, under section 271(1)(a) for not filing the returns within the period provided under section 139(1) of the Act. Thereupon, the petitioner filed a revision petition before the Commissioner of Income-tax under section 264 of the Act questioning the order of penalty imposed by the Income-tax Officer under section 274 of the Act and invited the attention of the Commissioner that there is sufficient cause for the delayed finalisation of the income-tax returns and that, therefore, the Commissioner should exercise his discretion given in section 271(4A) and give him the appropriate relief thereunder. In his revision petition the petitioner would state that the returns were filed voluntarily before a notice under section 139(2) was given ; he made full disclosure of his income and the returns have been fully accepted ; that he co-operated in the enquir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....escribes an outer limit for the filing of returns by a recalcitrant assessee, who fails to file such a return within the time prescribed under section 139(1) of the Act ; but such a concession given in the matter of filing of such returns would not enable such an assessee to escape the penalty proceedings under section 271 which proceedings are independent and separate and are based on considerations other than those arising by the fact of filing delayed returns. It is said that, as section 271 enables the Income-tax Officer or the Appellate Assistant Commissioner, as the case may be, to impose a penalty if he finds that there was no reasonable cause for the furnishing of the returns of the total income within the time as prescribed under section 139(1) and as this power is vested statutorily in the Income-tax Officer, it is in no way relatable to the statutory concessions which a petitioner could avail of for filing returns beyond the prescribed time but before the assessment is made. It is, however, vehemently contended that the assessee, if he wishes to take advantage of section 271(4A), should not wait till the penalty proceedings are completed in a normal course, but he should....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... furnish a return of his income under section 139(1), to direct the person to pay by way of penalty, in addition to the amount of tax, if any, payable by him, a sum equal to two per cent. of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax. The first contention referred to already by me of Thiru Ramachandran, the learned counsel, is that section 271 cannot be invoked at all by the Income-tax Officer or the Appellate Assistant Commissioner, as the case may be, once the return has been filed as required under section 139(4) of the Act. Reliance is placed on the decision in Commissioner of Income-tax v. Kulu Valley Transport Co. P. Ltd. I have already stated that under sub-section (4) of section 139, a statutory concession is given to a lethargic assessee who fails to furnish his normal returns as prescribed in sub-section (1) of section 139. This concession cannot be misunderstood as one which could be availed of by such an assessee for all times and under all circumstances posed in the Act. One such circumstance is that if he shows no sufficient cause as to why the returns were not furnished normally under sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re to be treated as otiose if and when a return is accepted by the department under the privileged provision, namely, section 139(4). It may be that a return filed under section 139(4) is a permissive return, in the sense the statute permits the furnishing of such a return beyond the time prescribed under section 139(1). But, its propriety in the sense whether the delay in filing or furnishing of such returns was accidental or otherwise has to be adjudicated upon under the independent provision of section 271 and this jurisdiction cannot be said to have been set at naught merely because the statute permits the acceptance of a return beyond the prescribed, time under section 139(1) and before the assessment proceedings are concluded. The propriety or regularity of a particular matter may relate to problems connected with time or manner of presentation or any defect inhered there in. If therefore section 271 enables the Income-tax Officer to find whether there was reasonable cause for such a delayed return, then it cannot be said that by a mere acceptance of such a return, by invoking section 139(4) of the Act, the substantive procedure which enables the imposition of a penalty under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he exercise of judicial discretion by the Commissioner while dealing with matters which come up before him for the purpose of reducing or waiving the amount of minimum penalty imposable, on an assessee who files a delayed return or who is said to have concealed his income, etc. The word " reduce " in section 271(4A) also gives the clue that he could only reduce the penalty which has already been imposed and naturally, therefore, it cannot refer to reduction of a penalty which is likely to be imposed or which may not be imposed at all. In this sense also and for the reason that this sub-section deals only with a power and is not indicative of procedure as is normally understood, the Commissioner of Income-tax is bound while exercising his jurisdiction under section 264 to consider in appropriate cases whether he should exercise his judicial discretion as contemplated in section 271(4A). The text of section 271(4A) which is the foundation for exercise of such a judicial discretion is also illustrative of the scope of such a power. The Commissioner while dealing with a situation like the one which has arisen in this case, has to find whether the person concerned has furnished accurat....