Vaidya, J. -
(1.)THE petitioner is an assessee liable to pay Income-tax from the assessment year 1959-60, for the previous year ending with 30th September, 1958. THE petitioner had been submitting the returns in pursuance of notices issued under Section 22(2) of the Indian Income-tax Act, 1922. THE Income-tax Act of 1961 (hereinafter referred to as "the Act") came into force from the 1st April, 1962, and the petitioner submitted his return pursuant to a notice issued by the Income-tax Officer under Section 139(2) of the Act. No return was filed by the petitioner under Section 139(1) of the Act and no action was taken by the Income-tax Officer against the petitioner in that behalf. For the assessment year 1963-64, the petitioner under a bona fide belief that he has to file the return after receipt of a notice under Section 139(2) of the Act, waited for such a notice. He got such a notice on 8th September, 1963, and sumitted his return in the prescribed form on 3rd October, 1963, Prior to the issuance of the notice under Section 139(2) by the Income-tax Officer, he had received notices for payment of advance tax and he has also paid advance tax in pursuance of those notices. After the filing of the return, on 24th December, 1963, the Income-tax Officer assessed him provisionally under Section 140 of the Act. On 22nd April, 1964, the Income-tax Officer made the assessment order holding that the petitioner was liable to pay a iax of Rs. 60,133.86. Out of this amount, he deducted the amounts paid under Sections 210 and 141 and arrived at Rs. 1,998.07 as the balance payable. To that he added interest for two days under Section 139 arriving at the total figure of Rs. 2,015.71. He further adjusted a sum of Rs. 57.27 being the refund for 1960-61 and also an amount of Rs. 1,958.44, being a part of refund for 1962-63. Thus he held that the net tax payable by the petitioner was "nil". On the same day on which the Income-tax Officer passed the assessment order, he issued a notice under Section 271 of the Act stating that the petitioner bad without reasonable cause failed to furnish the return of income which he was required to furnish under Section 139(1) within the time allowed and in the manner required by the said section. THE petitioner was, therefore, requested to appear before the Income-tax Officer on 15th May, 1964, and show cause why an order imposing penalty should n6t be made under Section 271 of the Act. In pursuance of this notice, the petitioner made his representation before the Income-tax Officer wherein he stated that he was under the bona fide impression that he would be served with a notice to file a return of income as was being done in the previous years. He had no intention to avoid the payment of tax and that he has been a regular taxpayer. This explanation of the petitioner was considered by the Income-tax Officer and by his order dated 23rd October, 1964, he rejected the explanation offered by the petitioner and came to the conclusion that there was no reasonable cause for not filing the return within the time prescribed under Section 139(1) of the Act. He, therefore, levied a penalty at the rate of two per cent, of the net tax pay- able, the period of default being three months. THE Income-tax Officer thereafter issued a notice on 22nd April, 1965, under Section 154 of the Act for rectification of the mistake. THE mistake sought to be rectified was that in ihe order dated 23rd October, 1964, the penalty was calculated on the tax as reduced by the compulsory deposit and the advance tax paid which was not correct, and that the amount on which the penalty was to be calculated would be Rs. 60,998*86, i.e., the tax chargeable according to the Finance Act, 1963. After hearing the petitioner, the Income-tax Officer made his order under Section 154 on 7th May, 1965, enhancing the penalty from Rs. 3,200 to Rs. 3,687. THE assessee filed an appeal before the Appellate Assistant Commissioner aggrieved by the order of the Income-tax Officer dated 23rd October, 1964. He also filed an appeal against the order of the Income-tax Officer dated 7th May, 1965. Both these appeals were disposed of by the Appellate Assistant Commissioner by a common order dated 20th August, 1966. He held that the Income-tax Officer was justified in imposing the penalty for default in complying with the provisions of Section 139(1). He, however, held that as the notice under Section 139(2) was served on the assessee on 8th September, 1963, pursuant to which he filed the return, the assessee could be considered as having reasonable ciuse for not filing the return under Section 139(1). He, therefore, held that the period of default was from 30th June, 1963, to 8th September, 19.63, i.e., the date on which the notice under Section 139(2) was issued by the Income-tax Officer. Accordingly, the Appellate Assistant Commissioner fixed the period of default as two months and reduced the penalty from Rs. 3,687 to Rs. 2,458.
(2.)AGAINST the order of the Appellate Assistant Commissioner, both the Income-tax Officer as well as the assessee came up in appeal before the Tribunal. The Tribunal allowed the appeal filed by the department and dismissed the appeal filed by the assessee. In the result, the order of the Income-tax Officer was upheld and that of the Appellate Assistant Commissioner set aside. The petitioner seeks to set aside the aforesaid orders of the income-tax authorities levying penalty on him.
The contentions raised by the petitioner are :
(1) Section 139(1)(a) and (b) of the Act are violative of article 14 of the Constitution.
(2) Section 271(1) also infringes article 14 of the Constitution.
(3) Under Section 271(1)(a) penalty can be imposed only in case an assessee fails to file a return under Section 139(1) of the Act. In the instant case, there was only an omission on the part of the assessee to file the said return and, therefore, the provisions of Section 271(1) are not attracted.
(4) Once a return is filed under Section 139(2) of the Act, an assessee is discharged of his liability to file the return under Section 139(1). No proceedings, therefore, for an imposition of penalty can be taken against such an assessee.
(5) Penalty proceedings are vitiated as the Income-tax Officer had not satisfied himself before the passing of the assessment order that the petitioner had failed to furnish his return in accordance with Section 139(1)(a).
(6) The Income-tax Officer was biased against the petitioner and the order made by him, therefore, is void and illegal.
(7) Failure to file a return under Section 139(1) of the Act has been made punishable and, therefore, is an offence. For every offence, there should be a mens rea which should be established by the prosecution. In the instant case, the department has not established that the petitioner wilfully or purposely failed to file the return so as to evade payment of tax.
Section 139(1)(a) and (b) of the Act read :
" 139. Return of income.--(1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed-
(a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession before the expiry of six months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later ;
(b) in the case of every other person, before the 30th day of June of the assessment year :......... "
(3.)IT is argued by the learned counsel for the petitioner that this section divides the assessees into two classes ; (i) whose income includes income from business or profession, and (ii) others who are not in that category. By Clause (a) of Sub-section (1), a period of six months has been prescribed for the assessees whose income includes income from business or profession from the end of the previous year or before the 30th day of June of the assessment year, whichever is later. In the case of assessees whose income does not include an income from business or profession, the last day for filing of the return is 30th day of June, of the assessment year. The argument is that persons coming under Clause (a) get a period of six months whereas persons who come under Clause (b) get only a period of three months from the date of the commencement of the assessment year, i e,, 1st of April. IT is argued that there is no reasonable classification in making this distinction and, even if there is any classification, there is no nexus between the classification and the object sought to be achieved by this classification. IT is urged that the object in enacting Section 139(1) is the speedy collection of income-tax and by providing for different periods in the aforesaid two cases, this object is not in any manner achieved. IT is further argued that assuming the assessee whose income includes income from business or profession can be separated from assessees whose income does not include income from business or profession, there is discrimination between the assessees whose income includes income from business or profession. In regard to the assessees contemplated in Clause (a) of Section 139(1), different periods have been prescribed.
To illustrate : Assessees whose income includes any income from business or profession and whose previous years expire on or before the 31st day of December, of the year immediately preceding the assessment year, will get a period of more than six months. In the instant case the assessee whose previous year terminated on 30th September, 1963, gets a period of nine months for submitting the return of income. It is also argued that when calculated from the beginning of the assessment year for persons whose previous year coincides with the financial year, they get a period of about six months, i.e., up to the end of September, of the assessment year whereas other assessees get time up to the end of June, i.e., only a period of three months. The purpose of enacting Section 139(1) being aspeedy recovery of tax, the difference between the periods as stated above is discriminatory.