1976 (11) TMI 8

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....alty under s. 271 (1)(a) is to be imposed should start from the date on which the return of income became due under s. 139(1) of the Act ?" The assessee is a registered firm. The reference relates to the assessment year 1964-65. For this assessment year, the return of income was due to be filed under sub-s. (1) of s. 139 of the 1961 Act by the 30th June, 1964. A notice under s. 139(2) was served on the 13th July, 1964, according to which the return was due to be filed in August, 1964. The return of income was filed only on the 27th October, 1965. Hence the ITO in course of the assessment proceedings, initiated action for penalty under s. 271(1)(a). The ITO did not accept the assessee's contention that since the return of income had....

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....garam Chapolia [1976] 103 ITR 613 (Orissa) [FB]. The law appears to be well settled and question No. 1 is accordingly answered in the affirmative and in favour of the revenue. We now come to question No. 2. Learned counsel for the applicant has referred us to a decision of the Patna High Court in Addl. CIT v. Bihar Textiles reported in [1975] 100 ITR 253 (Pat). In this case, the Patna High Court has held that once a notice under sub-s. (2) of s. 139 of the I.T. Act, 1961, has been issued to an assessee during the relevant assessment year, there cannot be any penalty under s. 271(1) for failure to furnish the return as required by sub-s. (1) of s. 139. We are unable to agree with the view of the Patna High Court. Our view is that on....

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....ned to agree with the Rajasthan High Court. It is to be noted that an ITO, before he makes a best judgment assessment under s. 144, is bound to give a notice under s. 139(2). An assessee cannot, therefore, be allowed to wait till a notice is given under s. 139(2) and escape the consequences of penalty imposable under s. 271(1)(a). The same view has been taken by the Delhi High Court in CIT v. Hindustan Industrial Corporation reported in [1972] 86 ITR 657 (Delhi). The Delhi High Court says that the plain language of s. 139(2) cannot be construed by saying either that the assessee is absolved of his statutory obligation to file a return of his income voluntarily under s. 139(1) and the default committed in not filing a return voluntarily u....