COMMISSIONER OF INCOME TAX Vs. MALANGADAN TIMBER TRADERS

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Madras Bench "B", has stated two cases in relation to the assessment years 1960-61 and 1961-62 and has referred the following common question arising for the two years for our decision :

(2.) THE assessee, a firm, was registered by certificate issued on March 26, 1962, for the assessment year 1960-61. THE firm was constituted on January 19, 1960, and the application under Section 26A of the Indian Income-tax Act, 1922, was on March 1, 1960. THE application is, therefore, in conformity with the rules framed under Section 59 of the Indian Income-tax Act, 1922, and it is clear from Rule 4 that the certificate of registration will have effect for the assessment year ending on 31st March, 1961. THE registration of the firm had been renewed for the year 1961-62 as well. For the two years returns were submitted by the firm only on June 21, 1961, and April 6, 1962, respectively. Admittedly these returns had been submitted out of time. Penalty was, therefore, sought to be imposed on the firm under Section 28(1)(a) of the Indian Income-tax Act, 1922, for not having complied with Section 22(1) of the Act. Though the Income-tax Officer imposed penalty for the two years, the Appellate Assistant Commissioner set aside the orders imposing penalty on the ground that the firm which was duly registered under the Act had no income in excess of the maximum amount not chargeable to income-tax during the two corresponding previous years to the assessment years 1960-61 and 1961-62. It was, therefore, held that there was no obligation on the part of the firm to file any return. Consequently, it was held that no penalty can be imposed under Section 28(1)(a). THE contention raised was that at the time (when the return should have been filed) the firm was obliged to file a return under Section 22(1) as it could not be taken to have been registered then, the certificate of registration being dated March 26, 1962, a date after the date before which the return should have been submitted. It was held that the registration will have effect for the assessment year and must, therefore, govern the provision relating to the submission of returns for that assessment year. This view of the Appellate Assistant Commissioner has been accepted by the Income-tax Appellate Tribunal but is hotly contested before us by counsel on behalf of the revenue.

(3.) PROVISO to Clause (d) to Sub-section (1) of Section 28 :