Supreme Court of India
AMIN CHAND PAYARELALversusINSPECTING ASSTI. COMMISSIONER, INCOME TAX AND ORS.
- Citation
- 2006 INSC 579
- Decided
- 5 September 2006
- Disposal
- Dismissed
- Bench
- ASHOK BHAN
Holding
A penalty under Section 271(1)(a) may be imposed where a return is filed beyond the period prescribed under Section 139(4) even if interest has been paid.
Summary
Amin Chand Payarelal filed income‑tax returns for assessment years 1959‑60 to 1965‑66 after the extended period allowed under Section 139(4) of the Income Tax Act, 1961, and paid interest on the delayed filing. The Assessing Authority, an Inspecting Assistant Commissioner, levied a penalty under Section 271(1)(a). The appellant contended that the payment of interest and the provision of Section 139(4) barred the penalty. The High Court Division Bench held that payment of interest does not extinguish liability for penalty and upheld the penalty. On appeal, the Supreme Court affirmed this view, relying on the earlier decision in Pradip Lamps Works v. Commissioner of Income Tax and distinguishing Commissioner of Income Tax, A.P. v. M. Chandra Sekhar, which dealt with returns filed under Section 139(1). The Court held that a penalty can be imposed under Section 271(1)(a) for returns filed beyond the period prescribed in Section 139(4). Consequently, the appeal was dismissed.
Issues considered
- Whether a penalty under Section 271(1)(a) of the Income Tax Act can be levied when a return is filed beyond the extended period under Section 139(4) but interest for the delay has been paid.
Legislation cited
- Income Tax Act, 1961s. 139(4), s. 148, s. 156, s. 271(1)(a)
Subjects
Income TaxSection 139(4)Section 271(1)(a)PenaltyLate filingInterestAssessment
Judgment
A AMIN CHAND PAYARELAL
v.
INSPECTING ASSTI. COMMISSIONER, INCOME TAX AND ORS.
SEPTEMBER 5, 2006
B [ASHOK BHAN AND MARKANDEY KA TJU, JJ.]
Income Tax Act, 1961--Sections 139(4) and 271(/)(a)-Filing of return
beyond the extended period under s.139(4)-Penalty-lmposition of-
C Justification-Held: Provision that assessee may file return any time before
assessment is made would not absolve assessee from the liability to pay
penalty-Even if assessee deposits interest for late filing, penalty, could be
levied under s.271 (/)(a). '
The question which arose for consideration in the present appeal was
D that when return has been filed beyond the extended period for filing under
section 139(4) of the Income Tax Act, 1961 and the assessee has paid interest
for the late filing, whether penalty under section 271(1)(a) of the Act could
be levied thereon.
Dismissing the appeal, the Court
E
HELD: Sub-section (4) of Section 139 of the Income Tax Act, 1961
provides for a situation where the returns are not filed by an assessee within
the time allowed or within the extended period for filing such returns. Merely
because sub-section (4) of Section 139 enable the assessee to file his return
at any time before the assessment is made, it does not mean that his liability
F to pay penalty under Section 27l(l)(a) is erased. The penalty could be levied
under Section 27l(l)(a) of the Act. The impugned judgment of the Division
Bench of High Court that mere deposit of interest would not absolve the
assessee from its liability to pay the penalty under section 271(1)(a) of the
Act is upheld. (735-A, G; 736-A-BJ
G Commissioner of Income Tax, A.P. v. M. Chandra Sekhar, (1985) 151
ITR 433, distinguished.
Pradip Lamps Works v. Commissioner of Income Tax, (2001) 249 ITR
797, relied on.
H 730
AMIN CHAND PAYARELAL 1·. INSPECTING ASSTI. COMMISSIONER, INCOME TAX [BHAN, J.] 73 J
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4114 of2001. A
From Judgment and Order dated 28.9.2000 of the High Court of Calcutta
in F.M.A. No. 1160/1990.
Anil Roychowdhury, Raja Chatterjee, Sutapa Roychowdhury, Sachin
Das and G.S. Chatterjee for the Appellant. B
Harish Chandra, Preetesh Kapur, Arijit Prasad and B.V. Bairam Das for
the Respondents.
The Judgment of the Court was delivered by
BHAN, J. This appeal is directed against the order dated 28th September,
c
2000 passed by a Division Bench of the High Court of Calcutta in FMA No.
1160 of 1990 whereby the Division Bench has set aside the order passed by
the Single Judge of the same Hign Court and dismissed the writ petition filed
by the writ petitioner-appellant.
D
Brief facts giving rise to file the present appeal by special leave are as
follows:
The appellant filed a writ petition in the High Court, inter alia, seeking
an appropriate writ, order or directions and/or to withdraw the order dated
26th September, 1974 passed by the Commissioner of Income Tax, Central and E
the orders of assessment and penalty proceeding under Section 271 (I )(a) of
the Income Tax Act, 1961 (for short "the Act") and the demand notice issued
under Section 156 of the Act and also the order dated 7th of October, 1974
imposing penalty.
The learned Single Judge before whom the writ petition came up for F
hearing allowed the writ petition and held that the penalty imposed by the
Authorities was not in accordance with law and consequently the order
imposing penalty and demand notice for realization of penalty for the
assessment years 1959-60 to 1965-66 was quashed.
G
The learned Single Judge allowed the writ petition on the grounds(a)
that the imposition of penalty was without jurisdiction in view of the fact that
interest had been paid for late filing of the returns for the aforesaid years; and
(b) that the penalty under Section 271(1)(a) of the act could not be imposed
by the Inspecting Assistant Commissioner of Income Tax as he had no
jurisdiction to do so and, only the Income tax Officer was competent to H
732 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
A impose penalty as per provisions of Section 27l(l)(a) of the Act.
During the course of arguments, counsel appearing for the respondent-
assessee before the Division Bench of the High Court, the appellant herein,
did not dispute the jurisdiction of the Inspecting Assistant Commissioner of
the Income Tax to impose the penalty for not filing the returns within the
B extended period. The Division Bench recorded the following findings:
" .... However, before us the learned advocate for the writ petitioner/
respondent did not question of jurisdiction of the Inspecting Assistant
Commissioner of the Income Tax to impose penalty on the writ petitioner
for not filing the return within the extended time, that was granted by
c the concerned authority ....."
On the afore-mentioned first point, the Division Bench came to the conclusion
". that mere deposit of interest would not absolve the assessee from its liability
to pay the penalty under Section 27l(l)(a) of the Act. To appreciate the
contention it is necessary to understand the scheme enacted in Section 139
D of the Act, as it stood at the relevant time. Broadly, the scheme envisages
a voluntary return by the assessee under sub-section (I) of Section 139, a
return consequent upon a notice by the ITO under sub-section (2) of Section
139 and a return in the circumstances mentioned in under sub-section (4) of
Section 139. We are not concerned with the return filed under sub-section (1)
E or (3) of Section 139. We are concerned with the situation where the return
has been filed under Section 139(4) of the Act which at the relevant time read
as under:
"(4)(a) Any person who has not furnished a return within the time
allowed to him under sub-section (I) or sub-section (2) may, before
F the assessment is made, furnish the return for any previous year at
any time before the end of the period specified in clause (b ), and the 1
provisions of sub-section (8) shall apply in every such case.
(b) The period referred to in clause (a) shall be-
G (i) where the return relates to a previous year relevant to any
assessment year commencing on or before the Ist day of April,
1967, four years from the end of such assessment year;
(ii) where the return relates to a previous year relevant to the
assessment year commencing on the 1st day of April, 1968, three
H years from the end of the assessment year;
AMIN CHAND PAYARELAL •'.INSPECTING ASSTT. COMMISSIONER, INCOME TAX [BHAN, I.] 733
(iii) where the return relates to a previous year relevant to any other A
assessment year, two years from the end of such assessment
year,"
Section 271 provides for levy of penalty under sub-clauses (a)(b) and
(c) of sub-section (1) of Section 271. In the present case, the penalty has been
levied under Section 27l(l)(a), as it stood at the relevant time and the same B
reads as under:
"271. (I) If the Income-tax Officer or the Appellate Assistant
Commissioner in the course of any proceedings under this Act, is
satisfied that any person
c
(a) has without reasonable cause failed to furnish the return of total
income which he was required to furnish under sub-section (I) of
Section 139 or by notice given under sub-section (2) of Section 139
or Section 148 or has without reasonable cause failed to furnish it
within the time allowed and in the manner required by sub-section ( 1)
of Section 139 or by such notice, as the case may be, or" D
Under this provision, in essence, three situations are contemplated in which
penalty can be imposed, i.e., (i) where the assessee has without reasonable
cause failed to furnish the return of total income which he was required to
furnish under sub-section ( 1) of Section 139; (ii) or where the assessee has E
without reasonable cause failed to furnish the return of total income which
he was required to furnish by notice given under sub-section (2) of Section
139 or Section 148; and (iii) or where the assessee has without reasonable
cause failed to furnish it within the time allowed and in the manner required
by sub-section (I) of Section 139.
F
The following chart would indicate the dates on which the returns were
• required to be filed, the extended time/date within which they were to be filed
and the dates on which they were actually filed.
734 SUPREME COURT REPORTS (2006) SUPP. 5 S.C.R.
A Year Date on which the The time was Date on which
return ought to extended to file return actually
have been filed the return filed
1959-(.0 18.06.1959 14.11.1959 04.02.1961
1960-61 20.06.1960 01.10.1962 30.08.1962
B 1%1-62 30.06.1961 31.08.1962 05.10.1962
1%2-63 04.08.1963 31.08.1962 05.10.1962
1%3-64 Nil No. appln. 07.12.1964
1%4-65 07.06.1964 30.09.1964 18.01.1965
c No. appln.
1%5-66 21.07.1965 21.01.1966
Admittedly, the appellant did not file the return either within the time
specified in the statute for doing so or within the extended period of time. The
returns were filed beyond the extended period for filing the return. Interest
D on the amount due and penalty are two different and distinct concepts.
Interest is the accretion on the capital whereas the penalty is a punishment
imposed on a wrong-doer.
Counsel appearing for tlie assessee in support of the contention placed
reliance on a judgment of this Court in Commissioner of Income Tax, A.P. v.
E M Chandra Sekhar, (I 985) 15 I !TR 433. In the said case, their Lordships were
dealing with return filed under Section 139(1) of the Act whereas in the
present case the returns had been filed under Section f 39(4). The assessee
was absolved of his liability to pay the penalty under provisos to Section
139(1). It was observed:
F "In the instant case, the extension was a matter falling within Sub-
section (I) of Section 139, and the returns furnished by the assessee
must be attributed to that provision. They were not returns furnished
within the contemplation of Sub-section (4) of Section 139. Therefore,
the decision, of the Gujarat High Court in Addi. CIT v. Santosh
G Industries, (1974) 93 !TR 563. of the Karnataka High Court in Nagappa
v. ITO, (1975) 99 !TR 32 of the Andhra Pradesh High Court in Poorna
Biscuit Factory v. CIT, ( 197 5) 99 !TR 4 I , of the Orissa High Court in
CIT v. Gangaram Chapolia, (1976) 103 !TR 613 [FB) and of the
Allahabad High Court in Metal India Products v. CIT, (1978) 113 !TR
830 FB cannot be invoked in the instant case. They are cases dealing
H with a return filed in the circumstances mentioned in Sub-section (4)
AMIN CHAND PAYARELAL r. INSPECTING ASSTT. COMMISSIONER, INCOME TAX (BHAN. J.J 735
. '
of Section 139." A
Meaning thereby that cases falling under Section 139(1) and 139(4) have to
be dealt with differently. Sub-section (4) of Section 139 of the Act provides
for a situation where the returns are not filed by an assessee within the time
allowed or within the extended period for filing such returns. In the present
case, the returns in question had not been filed either within the time allowed B
under the Act or within the extended period. The reliance placed on the
aforesaid judgment lends no assistance to the appellant as the principle on
which the aforesaid decision has been rendered is distinguishable and cannot
be applied to the admitted facts in the present case.
In the present case, as mentioned above, the return was filed under sub- C
section (4) of Section 139 of the Act. The question is whether penalty under
Section 271(1)(a) could be levied on a return filed under Section 139(4) fell for
consideration before this Court in Pradip Lamps Works v. Commissioner of
Income Tax, (2001) 249 ITR 797. The question posed in that case was as
under: D
Question No. 2:
"Whether, on the facts and the circumstances of the case, the Triblmal
was right in holding that notwithstanding that the return of Income
had been filed on February 6, 1961, i.e., within the period permissible E
under Section 139(4) of the Income Tax Act, 1961, the imposition of
a penalty was justified as there was a delay for the purpose of section
271(l)(a) of the Income Tax Act, 1961?"
It was answered in the following terms:
"So far as the second question is concerned, the only submission is F
that since the assessee was entitled to and did file his return before
making the assessment, no penalty should be levied under Section
271(1)(a), even though the return was filed beyond the prescribed
date. We do not think that this contention is sustainable in law.
Merely because, sub-section (4) of Section 139 enables the assessee G
to file his return at any time before the assessment is made, it_ does
not mean that his liability to pay penalty under Section 27l(l)(a) is
erased. We affirm the opinion of the High Court on this question as
well."
We respectfltlly follow the law laid down in Pradip Lamps Works 's case H
736 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
A (supra). There are number of High Courts who have taken the same view.
We hold that the penalty could be levied in the present case under
Section 27l(l)(a) of the Act.
For the reasons stated hereinabove, we do not find any merit in this
B appeal and dismiss the same. The impugned judgment of the Division Bench
is affirmed. Parties to bear their own costs.
N.J. Appeal dismissed.
,
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'
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