Both these appeals, by department, are against order of AAC, Range-X, for asst. yrs. 1977-78 and 1978-79, for which years AAC had deleted penalty under s. 271(1)(a) levied by ITO, B.S.D.(East), Bombay. penalty levied for asst. yr. 1977-78 is Rs. 4,330 and that for asst. yr. 1978-79 is Rs. 8,100. Since issue involved is common, both these appeals are dealt with and disposed of by consolidated order for sake of convenience. For asst. yr. 1977-78 return was filed on 5th July, 1978 though due on 30th June, 1977. There was, according to ITO, delay of 12 months in filing of return. He issued notice under s. 274 read with s. 27f asking assessee to show cause why penalty should not be levied for late submission of return. There was no compliance to this notice by assessee. ITO, therefore, proceeded to levy penalty of Rs. 4,330. AAC found that assessee had sought extension of time which was not considered by ITO at all. In fact for asst. yr. 1977-78, five such applications were filed and return was filed before date of final extension. AAC felt that penalty was wrongly levied and, therefore, cancelled same. For asst. yr. 1978-79 ITO levied penalty of Rs. 8,100 because there was delay of 20 months in filing of return by assessee. returns, which was due on 30th June, 1978, was in fact filed on 30th Jan., , 1980. Since there was no reply to show cause notice, ITO proceeded to levy aforesaid amount of penalty. AAC for this year also deleted penalty on ground that ITO had not taken into account fact that assessee had sought extension of time on number of occasions. Actually extension of time was sought upto 31st March, 1980, where as return of income was filed on 30th Jan., 1980. Since time asked for was not refused, period for filing return was to be treated as having been extended till date for which extension was assessed for. In this view of matter, AAC deleted penalty. While challenging decision of AAC, Shri R. Raju ld. Departmental representative, argued that returns were filed under s. 139(4) of Act and, that therefore, assessee was precluded form filing application for extension of time for filing return. While replying to this argument, Shri Kotak, for assessee, pointed out that it was not correct for Department to take stand that return was filed under s. 139(4) of Act. He said that five applications were filed in Form no.6 seeking extension of time to time till date of return of income was filed on 25th July, 1978 for asst. yr. 1977-78 and even applications were filed in same form seeking similar extension from time to time till return of income was filed on 30th Jan., 1980 of asst. yr. 1978-79. first application in Form No. 6 for asst. yr. 1977-78 was filed on 24th June, 1977 which was well before time when return was due and in that sense return was intended to be filed on 24th June, 1977 which was well before time when return was due and in that sense assessment return was intended to be filed under s. 139(1) of IT Act. None of these applications were replied to by ITO. On other hand, none of applications wee rejected by department. It should, therefore, be presumed that time asked for from time to time was granted. Shri Kotak further pointed out that ITO in his penalty order has not taken any cognisance whatsoever of replies to show cause notice under s. 2744 read with s. 271 filed by assessee on 13th April, 1979 and 9th Jan., 1982 for asst. yrs. 1977-78 and 1978-79. Copies of these replies have been filed before us. details of various applications in Form No. 6 filed from time to time were given in this reply and it was brought to notice of ITO that none of applications in Form No. 6 was rejected by income tax department. Shri Kotak thereafter pointed out that for asst. yr. 1977-78 total income assessed was Rs. 62,280 and gross tax payable by firm along with surcharge amounted to Rs. 5,340. Therefore, on completion of assessment amount of Rs. 564 was refundable to assessee although interest under Rs. 139(8) amounting to Rs. 1,836 was charged. Similarly, for asst. yr. 1978-79 after adjusting advance-tax and self- assessment tax against tax raised on completion of assessment, there was no tax payable except interest charged under s. 139(8) and, therefore, prima facie no penalty under s. 271(1)(a)could be levied in view of decision of Gauhati High Court in case of CIT vs. Maskara Tea Estate (1981) 21 CTR (Gau) 47: (1981) 130 ITR 955 (Gau). Shri. Kotak thereafter relied on decision of Bombay High Court in case of Lachman Chaturbhuj Java vs. R.G. Nitsure & Ors. (1981)132 ITR 631 (Bom), in which Bombay High Court held that if Department chooses not to reply to assessee's application within time applied for by assessee, time is deemed to be extended as prayed for by assessee, and he would be justified in assuming that his application has been granted by department. He also drew our attention to recent decision of Supreme Court in case of CIT vs. M. Chandra Sekhar (1985) 44 CTR (SC) 110; (1985) 151 ITR 433 (SC) in which Supreme Court held that if ITO had levied interest upto date of filing of Return, it must be presumed that ITO had extended time for filing returns after satisfying himself that it was case for extension of time and in this view of Supreme Court cancelled penalty levied under s. 271(1)(a). We have considered submissions made on either side. In view of facts stated, above and authorities cited, we do not find any reason to interfere with orders of AAC for asst. yrs. 1977-78 and 1978-79 which we would confirm. In result, departmental appeals are dismissed. *** EIGHTH INCOME TAX OFFICER v. KISHORE KUMAR & BROS