Judgment :- ISMAIL, J. : The Tribunal, Madras Bench, under S. 256(1) of the IT Act, 1961, has referred the following question of law for the opinion of this Court - 1. Whether the ITO was justified in levying a penalty of Rs. 4, 890 under S. 271(1)(a) for the asst. yr. 1964-65 ? 2. Whether the ITO was justified in levying a penalty of Rs. 3, 440 under S. 271(1)(a) for the asst. yr. 1965-66 ? 2. Whether the ITO was justified in levying a penalty of Rs. 6, 050 under S. 271(1)(a) for the asst. yr. 1966-67 ? Admittedly, in this case, the assessee did not file the returns for the three years in question in time. The actual dates on which the return were due and the dates on which the return were filed and the penalty levied by the ITO under S. 271(1)(a) are shown hereunder - |-----------|-----------------|---------------------|----------------| | Asst. yr. | Due date for | Date of actual | Penalty levied | | | filing of the | filing of the | by the ITO | | | returns | returns | | |-----------|-----------------|---------------------|----------------| | 1964-65 | 30th June, 1964 | 28th February, 1965 | Rs. 4890 | |-----------|-----------------|---------------------|----------------| | 1965-56 | 30th June, 1965 | 15th April, 1966 | Rs. 3440 | |-----------|-----------------|---------------------|----------------| | 1966-67 | 30th June, 1966 | 23rd February, 1967 | Rs. 6050 | |-----------|-----------------|---------------------|----------------| Against the imposition of those penalties, the assessee preferred an appeal to the AAC. The AAC held that the penalty leviable under S. 271(1)(a) should be restricted to 50 per cent of the tax payable by the assessee as a registered firm. On this basis, the penalty leviable on the assessee-firm was worked out to Rs. 2, 449 for the asst. yr. 1964-65, Rs. 2, 473 for the asst. yr. 1965-66 and Rs. 2, 727 for the asst. yr. 1966-67. Aggrieved against the order of the AAC, the Department took up the matter in appeals to the Tribunal. 2. On this basis, the penalty leviable on the assessee-firm was worked out to Rs. 2, 449 for the asst. yr. 1964-65, Rs. 2, 473 for the asst. yr. 1965-66 and Rs. 2, 727 for the asst. yr. 1966-67. Aggrieved against the order of the AAC, the Department took up the matter in appeals to the Tribunal. 2. Before the Tribunal, the contention of the Department was that in view of the fiction created under S. 271(2) that a registered firm has to be treated as an unregistered firm for purpose of levying penalty under S. 271(1)(i) , the AAC was not justified in holding that the penalty leviable under S. 271(i) should be restricted to fifty per cent on the tax payable by the assessee as a registered firm. The Tribunal by its order dt. 13th September, 1971 accepted this contention of the Department, allowed the appeals preferred by the Department, set aside the order of the AAC and restored the order of the ITO. It is the correctness of this order of the Tribunal that is challenged in the form of the three question extracted already, relevant for the three assessment year. 3. Sec. 271(1)(a)(i) is the relevant section and the same is as follows - (1) If the ITO or the AAC in the course of any proceedings under this Act, is satisfied that any person - (a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish under sub-s. (1) of s. 139 or by notice given under s.-s. (2) of S. 139 or s. 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-s. (1) of S. 139 or by such notice as the case may be ......... he may direct that such person shall pay by way of penalty, - (i) In the cases referred to in cl. (a) in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent of the tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent of the tax, ............" Sec. 271(2) which is also relevant is as follows : " When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under cl. (b) of S. 183 , then notwithstanding anything contained in the other previsions of this Act, the penalty imposable under sub-s. (1) shall be the same amount as would be imposable on the firm if the firm were an unregistered firm. "4. In this case, from the facts stated above, it is clear that the assessee-firm which was a registered one did not file the returns within the time for all the three assessment years. Equally, it is now established that the assessee had no reasonable cause for not filing the returns in time because the assessee did not take any steps against the order of the AAC holding that the assessee had incurred the liability of penalty but reducing the quantum of the penalty imposed by the ITO. Consequently, the only question that arises for consideration is as to whether the Tribunal was right in holding that s. 271(2) is applicable to the case and the AAC was wrong in bifurcating the section by imposing the penalty as if the assessee was an unregistered firm but restricting the maximum amount to 50 per cent of the tax payable by the assessee as a registered firm. As a matter of fact, the Tribunal has stated in its order thus :" * Under S. 271(1)(i) , the amount of penalty has to be calculated on the basis of the tax payable by the assessee. When penalty has to be calculated in the case of the registered firm, the tax liability of the firm has to be determined as if the firm was not registered on account of the fiction created in S. 271(2). The AAC's finding that that the penalty leviable under S. 271(1)(i) should be restricted to 50 per cent of the tax payable by the assessee as a registered firm, fails to give, effect to S. 271(2) and ignores the fiction created under it. The AAC's further finding that the fiction created under s. 271(2) will apply only to S. 271(1)(i) and not to the maximum penalty leviable is totally unwarranted in view of the clear and unambiguous language of S. 271(2). The fiction created under S. 271(2) will apply for the computation of penalty as well as the ceiling fixed for the levy of penalty. The fiction created under S. 271(2) will apply for the computation of penalty as well as the ceiling fixed for the levy of penalty. The AAC's finding leads to the anomalous conclusion that the fiction create under S. 271(2) , should be limited only to the computation of penalty and should not be extended to the ceiling fixed for the levy of penalty. Such bifurcation of the fiction created by s. 271(2) is totally unwarranted and not supported either by S. 271(1)(i) or S. 271(2). 5. The learned counsel for the assessee submits that he never supported the theory of bifurcation adopted by the AAC and all along the case of the assessee was that S. 271(2) was not at all attracted to the present case because the fiction to apply should have been created by S. 271(1) itself and the fiction not having been created by s. 271(1)(i) itself, the fiction created under S. 271(2) did not apply. We are unable to appreciate this argument. The language of sub-s. (2) of S. 271 is couched in the widest possible language and it has got the overriding effect in view of the express provisions contained therein, namely, "notwithstanding anything contained in the other provisions of this Act." Consequently, whether this sub-section finds a place as a separate sub-section or finds a place as a part of s. 271(1) , the language is clear and categorical and applies to the present case. That is the view which we have taken in our judgment dt. 1st April, 1976 in Subramaniam and Bros. vs. CIT T.C.P. 411 to 413 of 1975 and in our judgment dt. 13th September, 1976 in Essorde Industrial Madras vs. CIT T.C. 235 of 1972. Under these circumstances, the conclusion of the Tribunal is absolutely unexceptionable and, therefore, we answer the question referred to this Court in the affirmative and against the assessee. There will be no order as to costs.