LIBERAL ENGINEERING WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question is referred to us at the instance of the assessee for our opinion under S. 256 (1) of the IT Act, 1961 :

(2.) A few facts need be noticed in order to appreciate the dispute between the assessee and the Revenue in this reference. The assessment year under reference is 1968 69 and the assessee was required to file a return of income by June 30, 1968. The said return was filed on November 10, 1970, though in the statement of the case, it has been stated to be November 10, 1971. However, having regard to the date of the order of assessment wherein the correct date has been stated, we have, with the consent of the parties, taken this date of filing the return as November 10, 1970. The assessee returned an income of Rs. 51,759. It is common ground that the assessee had paid interest under S. 139(8) till the date of filing of the return. However, in view of the delay in filing the return, the ITO initiated action for levy of penalty under S. 271(1)(a) of the said Act. In reply to the show cause notice issued by the ITO, the assessee contended that the firm of which he was a partner was a registered firm which had already paid advance tax, and the assessment has resulted in the refund, and as such there was no default or for that matter any contumacious conduct. This plea of the assessee did not commend itself to the ITO, who imposed a penalty of Rs. 9,000.

(3.) AT the time of hearing of this reference, two contentions were urge by the learned advocate for the assessee. In the first place, he submitted that the Tribunal was clearly in error in law inasmuch as it has proceeded on a short ground that the question is covered by the decision of this Court in Damjibhai and Brothers' case (supra), which was not a case of payment of advance tax by the said firm and it was a case of tax to be paid on the self assessment by the assessee. In the second place, the learned advocate urged that having regard to the latest decision of the Supreme Court in CIT vs. M. Chandra Sekhar (1985) 151 ITR 433 (SC), there is a legal presumption that the time for filing the return was deemed to have been extended on the payment of the interest under proviso to Sub S. (1) of S. 139 and, therefore, there was no question of any delay in filing the return and the condition precedent for invoking the power to levy penalty under S. 271(1)(a) was not satisfied and, therefore, also the Tribunal has committed an error of law.