COMMISSIONER OF INCOME TAX Vs. GUJARAT AUTOMOBILES

JUDGEMENT

(1.) IN this case the Tribunal has referred the following question for our opinion at the instance of the revenue :

(2.) THE facts leading to this reference are as follows. We are concerned with assessment year 1965 -66. The assessee is a registered firm and itsprevious year for the purpose of assessment year 1965 -66 was calendar year 1964. Under section 139(1) the return of income was due on June 30, 1965. However, a notice under Section 139(2) was served by the Income -tax Officer on the assessee -firm and the notice was received on May 4, 1965, requiring the firm to submit its return of income by June 2, 1965. No return of income was filed on or before June 3, 1965, nor was an application for extension of time submitted during this period. An application for extension of time up to December 31, 1965, was, however, filed by the assessee in Form No. 6 on October 11, 1965, and the reason given in the application was that the accounts were not ready. The return was actually filed on December 24, 1965. After computing the assessment, the Income -tax Officer initiated penalty proceedings under Section 271(1)(a) and levied a penalty of Rs. 10,164 for late filing of the return by nearly six months. Thereafter, the matter was taken in appeal by the assessee to the Appellate Assistant Commissioner. The Income -tax Officer's action in levying the penalty for late filing of the return was confirmed but the period of late filing was considered to be five months instead of six months as held by the Income -tax Officer. Against the decision of the Appellate Assistant Commissioner, the assessee went in further appeal to the Tribunal and the Tribunal came to the conclusion that in computing the amount of penalty full effect should be given to the language of Section 271, subsection (2), and the Tribunal held that the firm must be allowed the benefit of deduction of annuity deposit which would have been payable from the total income by an unregistered firm and the tax payable by an unregistered firm on the balance of the total income should be computed accordingly. It is under these circumstances that the question came to be referred to us at the instance of the revenue.

(3.) UNDER section 271, Sub -section (2):