DIVAN, J. - (1.)THIS reference has been made by the Tribunal at the instance of the assessee and the following question has been referred to us for our decision :
'Whether, on the facts and circumstances of the case, penalty could be legally leviable in reassessment proceedings for the original default of not filing the return ?'

(2.)THE assessee is an individual and the relevant assessment years are 1955 -56, 1957 -58 and 1960 -61. The assessee was carrying on business as an individual in the relevant years and was the recipient of income from some foreign concerns. He did not file returns under section 22(1) for the respective assessment years. His explanation for not returning the income from the foreign concerns for the respective relevant assessment years was ultimately rejected by the revenue authorities. The Income -tax Officer having come to know that the assessee had not disclosed the commission from the foreign firms, initiated proceedings for reopening the assessments under section 147 of the Income -tax Act, 1961. After the issue of the notice under section 148, the assessee compelled with the terms of that notice, filed the returns and disclosed the commission received by him from the foreign firms. The Income -tax Officer while making the reassessments under section 147 also issued notices under section 271(1)(a) read with section 274 of the Income -tax Act, 1961, for the default committed in not filing the returns under section 22(1) of the Indian Income -tax Act, 1922. The assessee's explanation in not filing the returns under section 22(1) was rejected and the Income -tax Officer levied penalties in different amounts for the three assessment years. The assessee filed appeals before the appellate Assistant Commissioner and it was contended that no penalty could be levied for the default under section 22(1) of the 1922 Act in proceedings under section 148 of the 1961 Act. The contention was that there was no default in proceedings taken under sections 147 and 148 and, in accordance with the language of section 271(1)(a) of the 1961 Act, the original default in not filing the return under section 22(1) could not be the subject -matter of penal proceedings. It was urged on behalf of the assessee that the language used in section 28(1)(a) of the 1922 Act and section 271(1)(a) of the 1961 Act, wherein the words 'as the case may be' occur at the end are different and that under the new Act it was only if a default was committed in respect of notice under section 148 that the penalty under section 271(1)(a) could be levied and not if the default had been committed in filing the return in the original proceedings. This argument on behalf of the assessee was accepted by the Appellate Assistant Commissioner and the orders of penalty were set aside. The revenue carried the matter in appeal before the Income -tax Appellate Tribunal and the Tribunal held that the original default under section 22(1) could be the subject -matter under section 148 of the 1961 Act. The Tribunal held that the addition of the words 'as the case may be' in section 271(12)(a) did not materially alter the position as it existed under the 1922 Act. Thus, the Tribunal held that in reassessment proceedings the original default committed by the assessee in not filing the return could be penalised. It is after this decision of the Tribunal that the question hereinabove set out has been referred to us at the instance of the assessee.
In its order the Tribunal has set out side by side the provisions of section 22(1)(a) of the 1922 Act and section 271(1)(a) of the 1961 Act. It may be pointed out that the only additional words on which emphasis is laid so far as section 271(1)(a) is concerned are the words 'as the case may be' occurring at the end of clause (a) of section 271(1). It was pointed out that under section 271(1)(a) four types of defaults can be penalised, namely, (1) failure to furnish the return of total income which he was required to furnish under section 139(1)(2) failure to furnish the return of total income which he was required to furnish by notice given under sub -section (2) of section 139, or failure to furnish the return showing the total income which he was required to furnish under section 148(3) failure to furnish the return within the time allowed and in the manner required by section 139(1); or (4) failure to furnish the return of total income within the time allowed and in the manner required by such notice under section 139(2) or section 148; and the words 'as the case may be' occur at the end. It was contended on behalf of the assessee before us that the words 'as the case may be' go with the words 'in the course of any proceedings under this Act' and in any event they go with any one of the four clauses mentioned in section 271(1)(a). In our opinion, as a matter of interpretation of this clause according to grammatical meaning and context, the words 'as the case may be' go with the last two alternatives mentioned in section 271(1)(a), namely, 'has without reasonable cause failed to furnish it (the return) within the time allowed and in the manner required by sub -section (1) of section 139' or 'has without reasonable cause failed to furnish the return within the time allowed and in the manner required by such notice', that is, notice under section 139(2) or under section 148 and the words 'as the case may be' refer only to either of these two alternatives and they cannot be interpreted as referring to default No. 1 or default No. 2 mentioned by us in this judgment as occurring in the earlier part of clause (a) of section 271(1). Therefore, the addition of the words 'as the case may be' do not make any substantial difference between the proviso to section 28(1)(a) of the old Act and section 271(1)(a) of the new Act.

(3.)WE may point out that the Rajasthan High Court has taken the same view in Commissioner of Income -tax v. Indra and Co. The Rajasthan High Court has there held that an assessee is liable to penalty for not submitting his return as required in a notice under section 139(1) of the Income -tax Act, 1961, even though he subsequently files a return in pursuance of a notice under section 139(2) and an assessment is made on the basis of that return. The assessee in that particular case had not filed the return under section 139(1) of the Act before June 30, 1962, as required by law, applications for extension of time for filing the returns had been granted but the returns under section 139(1) were not filed even within the extended time. Ultimately, the Income -tax Officer issued notices under section 139(2) of the Act, calling upon the assesses to file returns within thirty days and the returns were filed. During the course of assessment proceedings, the Income -tax Officer issued notices against the assessees to show cause why penalty should not be imposed for failure to submit the returns under section 139(1) of the Act, and the explanation of the assessee was rejected and penalties were imposed on the assessee under section 271(1)(a) of the Act. Before the Rajasthan High Court reliance was placed on the words 'as the case may be' and, at page 704, the Rajasthan High Court observed :
'The addition of the words 'as the case may be' at the end of section 271(1)(a) of the Act present us with no problem in interpretation...' and it was further observed : 'The words 'as the case may be' have been put because all these four cases have been condensed in one paragraph and these words only mean that, whichever the case may be, the person shall be deemed to have committed default for which penalty was to be imposed under section 271(1)(i) of the new Act. These words 'as the case may be' have their full meaning when we construe section 271(1)(a) in this light'. To this extent there is slight difference between the interpretation placed by us on the words 'as the case may be' and the interpretation placed by the Rajasthan High Court. But it is pointed out as follows :

'Those words were not necessary in section 28(1)(a) of the old Act, for the reason that the words at the end of section 28(1)(a) 'by such notice' covered all the defaults mentioned therein, as all the defaults could be committed only when appropriate notices as required in section 22(1) or section 22(2) or section 34 of the old Act had been given. The words 'by such notice' meant a notice as may have been given either under section 22(1) or section 22(2) or section 34. Because the word 'such' covered the entire ground, it was not necessary to put the words 'as the case may be' in section 28(1)(a) at its end, but it became necessary to add these words in clause (a) of sub -section (1) of section 271 of the Act, because there were two kinds of defaults contemplated under it, one committed even when no notice is given and the other committed after notice. It may be mentioned that under the Act, no notice is to be issued for filing the return under section 139(1) and every person, if his total income exceeded the maximum amount which is not chargeable to income -tax, has to furnish the return of his income by or before a particular date as mentioned therein.'

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