NARANDAS PARMANAND DAS Vs. INCOME TAX OFICER

JUDGEMENT

(1.) This rule is directed against a notice under Section 274 read with Section 271 of the Income-tax Act, calling upon the petitioner to show cause why an order imposing a penalty should not be made, for the petitioner without reasonable cause failed to furnish the return which the petitioner is required to furnish by a notice given under Section 22 (1)/22(2)/34 of the Indian Income-tax Act, 1922, or which the petitioner is required to furnish under Section 139(1) or by a notice given under Section 139(2)/148 of the Income-tax Act, 1961, or have without reasonable cause failed to furnish it within the time allowed and in the manner required by the said Section 139(1) or by another notice asking the petitioner why a penalty should not be imposed for failure to pay the advance tax as required under the law. The petitioner is a partnership firm. The petitioner applied for registration of the firm but it was not allowed. The petitioner appealed against the order of refusal to grant registration under the provisions of the Income-tax Act. The said appeal, it is alleged, is still pending. For the assessment year 1963-64, respondent No. 1 assessed the total income of the petitioner at a sum of Rs. 6,56,260 during the year as a non-registered firm. Thereafter, by a subsequent order under Section 154 of the said Act, respondent No. 1 rectified the original order of assessment and enhanced the figure of the total income from Rs. 6,56,260 to Rs. 6,66,760. The petitioner stated that the time for furnishing the return for the assessment year 1963-64 was 30th June, 1963. Thereafter, the petitioner made an application in the prescribed Form No. VI on 11th June, 1963, for extension of the said period to file the return but, it is alleged, that no communication was made to the petitioner allowing any extension. The petitioner, however, filed the return on 23rd May, 1967, showing an income of Rs. 1,17,217.50. Thereafter, on 14th September, 1967, a revised return was filed showing an income of Rs. 38,208.53. It is alleged that because of. the alleged default for not filing the return within the time, that is, before 31st December, 1963, the Income-tax Officer charged penal interest at the rate of 6% under Section 139(1)(b)(iii) of the Act. The penal interest, it is alleged, charged amounted to Rs. 87,020. Thereafter, the original order of assessment for the said year was passed. The petitioner stated that the penal interest under the provision of Section 139(1)(b)(iii) was charged on the petitioner for the defaulter-assessee not as a registered firm but on the hypothetical amount assessed on the income of the defaulter-assessee as it was an unregistered firm. Thereafter, the petitioner was served with a notice under Section 274 read with Section 271 of the Act for the penalty proceedings. Being aggrieved by the said notices, the petitioner moved this court and obtained the present rule.

(2.) Affidavit has been filed by the respondent stating inter alia, that the petitioner applied for extension of time to file the return after 30th September, 1969. Thereafter, no application was made. On the application by Form No. VI the petitioner was given extension till 30th September, 1964, as prayed for but no further time was asked for. The petitioner, it is alleged, became a defaulter within the meaning of Section 271(1)(b) of the Act after 30th September, 1964. It is further alleged that the interest was charged, however, with effect from 1st January, 1964, from the petitioner on the assessed amount under the proviso to Section 139. It is further stated that the said amount of interest cannot be said to be a penal interest, but is only a liability under the statute itself. It is denied that the charging of interest under Section 215 and initiation of penalty proceedings under Section 273 of the Act will be a case of double jeopardy. In reply to the affidavit-in-opposition the petitioner reiterated the statement and contention made in the petition.

(3.) Mr. Sanjay Bhattacharjee on behalf of the petitioner contended that Section 139 of the Income-tax Act, 1961, is similarly worded as Section 22 of the Indian Income-tax Act, 1922. It is argued by Mr. Bhattacharjee that Section 139(1) of the 1961 Act is identically worded as Section 22(1) of the 1922 Act. Section 139(2) corresponds to 22(2) of the old Act, and Section 139(3) to 22(2A) of the old Act Section 139(4), (5), (6) are more or less similar to Section 22(3) and (5) of the old Act. Mr. Sanjay Bhattacharjee argued that Section 22(3) is nothing but a proviso to Section 22(1) and (2) and as such if the return is filed before the assessment is completed then it cannot be said that the return was filed out of time; and, therefore, the notice under Section 148 is without jurisdiction. Mr. Bhattacharjee relied on the cases, Commissioner of Income-tax v. Kulu Valley Transport Co. P. Ltd., and S.C. Prashar v. Vasantsen Dwarkadas, . Mr. Bhattacharjee further contended that if the penal interest is levied under Section 139, the respondent cannot initiate proceedings under Section 271 for penalty inasmuch as it amounts to double jeopardy.