INCOME TAX OFFICER v. SMT. MADHULIKA AGARWALLA
[Citation -1986-LL-0814]

Citation 1986-LL-0814
Appellant Name INCOME TAX OFFICER
Respondent Name SMT. MADHULIKA AGARWALLA
Court ITAT
Relevant Act Income-tax
Date of Order 14/08/1986
Assessment Year 1975-76
Judgment View Judgment
Keyword Tags initiation of penalty proceedings • barred by limitation • specific provision • extension of time • service of notice • fresh assessment • prescribed time • share income • form no. 6
Bot Summary: Return of income for the assessment year 1975-76 was not filed by her by the due date, i.e., to say 31-7-1975 as was required by section 139(1) of the Act. The assessee thereafter filed an application under section 264 of the Act before the Commissioner putting forth the grievance that there was sufficient cause for not filing the return of income and not making compliance of the notice under section 142(1). The ITO initiated penalty proceedings under section 271(1)(a) and called upon the assessee to explain why penalty should not be imposed for delay of 57 months in filing the return of income. No return of income can be filed under section 139 or 148 after making of assessment under section 144 of the Act. Even otherwise, the assessee cannot be blamed for the delay in filing the return after making the assessment under section 144 on 4-5-1979. Return under section 139 or under section 148 cannot be filed after making the assessment or reassessment. Later on, the ITO issued notice under section 148 with a direction to file return of income on or before 20-10-1970.


Aggrieved by order of Commissioner (Appeals) cancelling penalty of Rs. 83,500 imposed by ITO under section 271(1)(a) of Income- tax Act, 1961 (' Act ') department has come up in appeal. 2. These relevant facts need be noticed: assessee had mostly share income from some partnership firms. Return of income for assessment year 1975-76 was not filed by her by due date, i.e., to say 31-7-1975 as was required by section 139(1) of Act. She filed application in Form No. 6 on 28-6-1975 for extension of time for furnishing return up to 30-9-1975. ITO, it appears, did not pass any order on said application. He, however, issued notice under section 139(2) which was served upon assessee on 29-11-1975. Even then, assessee did not file any return of income. Subsequent notice under section 142(1) of Act served upon assessee also went unresponsed. ITO, therefore, completed assessment under section 144 of Act on total income of Rs. 60,000 on 4-5-1977. Application of assessee under section 146 of Act for reopening of assessment was rejected by ITO on 30-8-1977. Appeal from said rejection order of ITO before AAC by assessee also resulted in dismissal on 25-4-1978. assessee thereafter filed application under section 264 of Act before Commissioner putting forth grievance that there was sufficient cause for not filing return of income and not making compliance of notice under section 142(1). It was also grievance of assessee before Commissioner that assessment under section 144 was arbitrary. Commissioner allowed application by order dated 31-3-1979, set aside assessment and directed ITO to make fresh assessment after taking into account all relevant material. Thereafter, ITO by letter dated 28-4- 1980 required assessee to file, inter alia, return of income for assessment year 1975-76. In compliance with that letter of ITO [IAC (Assessment)] assessee filed return of income for assessment year 1975-76 on 30-5-1980. Thereafter, ITO made fresh assessment. 3. According to fresh assessment, it appears, that tax assessed was Rs. 1,67,009. ITO initiated penalty proceedings under section 271(1)(a) and called upon assessee to explain why penalty should not be imposed for delay of 57 months in filing return of income. This delay was computed from 31-7-1975 to 30-5-1980. Explanation of assessee was that because of long delay in receipt of account from partnership firm Metal Converter return could not be filed in time. ITO was not satisfied with explanation. He imposed penalty of Rs. 83,500. 4. assessee appealed before Commissioner (Appeals) against said penalty order. It was contended before Commissioner (Appeals) by assessee that ITO while computing period of delay did not take into account application filed for extension of time up to 30-9-1975 and further that assessee could not file return of income after making of assessment under section 144 on 4-5-1977 till it was set aside by Commissioner on 31-3- 1979. It was also contended that return could not be filed for non-receipt of accounts from partnership firm Bharat Mineral Sales Corpn. which firm itself filed return of its income for said assessment year on 2-9-1977. On consideration of these pleas taken by assessee Commissioner (Appeals) cancelled penalty. 5. At outset it is to be noticed that ITO fell in error in computing period of delay from 31-7-1975 to 30-5-1980. No return of income can be filed under section 139 or 148 after making of assessment under section 144 of Act. assessment under section 144 was made on 4-5-1977. assessee filed return on 30-5-1980 in compliance with direction of ITO contained in his letter dated 28-4-1980. That return was obviously filed beyond even extended period under section 139(4). Thus, said return was invalid return. ITO could not, therefore, take into account date of filing that return for purpose of calculation of delay. Even otherwise, assessee cannot be blamed for delay in filing return after making assessment under section 144 on 4-5-1979. 6. Next question arises as up to which date delay should be computed in case in which no return of income has been filed. There is specific mention in section 139(8) that where no return has been furnished period for charging interest should be reckoned till date of completion of assessment under section 144. There is no such specific provision in section 271. However, it is plain that section 271(1)(a) includes not only case of delayed filing of return but also of non-filing of return. Return under section 139 or under section 148 cannot be filed after making assessment or reassessment. Thus, assessee can avail of opportunity to file return till before making of assessment, of course, within prescribed time limit. It, therefore, follows that in case of non-filing of return, default continued till date of making assessment. Thus, when no return has been furnished at all period of default should be reckoned till date of assessment. ITO should have calculated period of delay from 30-9-1975 (till which date extension to file return was sought) to 4-5-1977 on which date assessment under section 144 was framed. 7. ITO further fell into another error, viz., that he though directed initiation of penalty proceedings under section 271(1)(a) in assessment order on 4-5-1977 but did not initiate any penalty proceedings on basis of that assessment order. Penalty proceedings on basis of that order must have had become barred by time by 31-3-1980. He initiated penalty proceedings on basis of reassessment. In such penalty proceedings ITO could not take into account delay in filing return in accordance with earlier proceedings. In this connection reference may be made to judgment of Madhya Pradesh High Court in case of CIT v. Marfatia & Co. [1982] 136 ITR 159. In that case there was some delay on part of assessee in filing returns of income. Accordingly, penalty notice was issued to assessee but no penalty was actually levied on assessee in course of original assessment proceedings. Later on, ITO issued notice under section 148 with direction to file return of income on or before 20-10-1970. assessee, however, filed return on 30-8-1971, i.e., to say after delay of 10 completed months. ITO again initiated penalty proceedings under section 271(1)(a) but while levying penalty ITO also took into consideration delay on part of assessee in submitting returns under section 139(1). In these facts and circumstances Hon'ble Madhya Pradesh High Court held that ITO had no jurisdiction to take into account delay anterior to service of notice under section 148. Similarly, in instant case, while initiating penalty proceedings on basis of later assessment order ITO had no jurisdiction to take into account delay in filing return in earlier proceedings. Strictly speaking, question of delay in later proceedings does not arise since return was filed beyond time prescribed in law. ITO did not proceed with penalty proceedings initiated on basis of earlier assessment order and even otherwise they became barred by limitation by 31-3- 1980. 8. Viewed from this angle it is not necessary to see if there was sufficient cause for delay in filing return. 9. order of Commissioner (Appeals) cancelling penalty is, therefore, upheld though for reasons other than those recorded by Commissioner (Appeals). 10. In result, appeal is dismissed. *** INCOME TAX OFFICER v. SMT. MADHULIKA AGARWALLA
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