R. M. Sahai, J. - (1.) The following questions have been referred for the opinion of this court : 1. "Whether on the facts and in the circumstances of the case a penalty under Sec. 271(1)(a) is precluded by virtue of the charging of interest under Sec. 139 ? 2. Whether the ratio laid down by the Supreme Court in the case of Kulu Valley Transport Co. is properly distinguished by the Tribunal - The assessee, a firm, filed its return 4th January, 1967 in response to a notice under Sec. 148 dated June, 1966. The return was due to be filed on 30th September, 1963. There was thus a delay of 41 months. The Income Tax Officer issued a notice under Sec. 271(1)(a) of the Income Tax Act to show cause why penalty be not levied for the late filling to the return. The assessee submitted its explanation alleging mainly that its Munim was a patient of paralysis and the account could not be completed within time. The explanation was not accepted and the penalty was levied.
(2.) Mr. Mahajan, learned counsel for the assessee, has urged that in a case where interest has been charged under Sec. 139, no penalty can be levied under Sec. 271(1)(a).
(3.) Under Sec. 139, the levy of interest is automatic, if there is delay in filling the return whereas levy of penalty depends on conditions mentioned in Sec. 271. Interest is compensation for the delayed payment, whereas penalty is the punitive levy for blame worthy conduct of the assessee. The argument that merely because the interest has been charged the levy of penalty is precluded, does not appear to be correct.;