TMI Blog1984 (5) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... UF and was partner in the firm, M/s. Tiwari Jhumarlal Swaroop Lal, through its karta, Shri Kanhaiya Lal Tiwari. M/s. Tiwari Jhumarlal Swaroop Lal had business at Jaipur, Bharatpur and Karauli. The assessee filed returns for the assessment years referred to above and on the basis of the said returns, assessments were completed. Subsequently, the Income-tax Department received information about concealment of income by M/s. Tiwari Jhumarlal Swaroop Lal and raids were organised on the premises of the said firm and its partners. The aforesaid raids resulted in discovery of concealment of income to the tune of Rs. 41 lakhs by M/s. Tiwari Jhumarlal Swaroop Lal. Thereupon, proceedings under ss. 147 and 148 of the Act were commenced against the assessee and notices under ss. 147/148 were issued by the ITO on March 4, 1964, requiring the assessee to file revised returns of its income. The assessee did not file the revised returns but appeared before the ITO through its karta, Shri Kanhaiyalal Tiwari, and one Gulab Chand. The ITO reassessed the income of the assessee and also imposed penalty on the assessee under s. 271(1)(a) of the Act for failure on its part to file the returns. The appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue, has on the other hand submitted that in view of the notice issued under s. 148 of the Act requiring the assessee to furnish a revised return, the assessee was liable to submit a fresh return of income. Shri R. N. Surolia has also submitted that the failure on the part of the assessee to submit the revised return in response to the notice issued under s. 148 of the Act rendered him liable to penalty under s. 271(1)(a) of the Act and that it was for the assessee to show that he had a reasonable cause for not filing the return. Shri Surolia also submitted that in the present case, the assessee had assigned two reasons for not filing the returns, viz., that the service of the notice on Gulab Chand was not a proper service on the assessee and that in view of the fact that the records and books of account of the assessee had been seized by the Department in May, 1963, it was not possible for the assessee to file a return. Shri Surolia has submitted that both the reasons given by the assessee for not filing the return have been rejected by the Tribunal and that, in the circumstances, it must be held that the assessee has failed to show that there was reasonable cause for its n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 147 of the Act. By a notice under s. 148, the ITO may also ask the assessee to furnish such other particulars as he may desire in the said notice. On the facts of the present case, we are not required to consider as to whether the assessee is liable to furnish a revised return in every case in which a notice has been issued under s. 148 of the Act. From the order of the Tribunal dated August 31, 1971, which has been annexed as annexure to the statement of the case, we find that under the notices that were issued to the assessee under s. 148 of the Act, the assessee was required to file revised returns of its income. We are, therefore, only required to consider as to whether in a case where an assessee has been served with a notice under s. 148 of the Act requiring him to file a revised return of its income, the assessee is liable to submit fresh returns of his income in compliance with the said notice. In our opinion, the notice issued under s. 148 requiring the assessee to file a fresh return carries with it an obligation to file the fresh return in pursuance of the said notice. In case the assessee feels that it is not necessary to file fresh return and that the earlier retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a reasonable cause. In support of this aforesaid submission, Shri Keshote has placed reliance on the decision of the Gauhati High Court in Sewbalakram Co. v. CIT [1984] 146 ITR 148. In this regard, Shri Keshote has also submitted that, in the facts and circumstances of the present case, it cannot be said that the aforesaid burden had been discharged by the Department inasmuch as the Department did not produce any material to show that the assessee had failed to furnish the return in response to the notice under s. 148 without reasonable cause. It cannot be disputed that proceedings for the imposition of penalty are quasi-criminal in nature. It has been so held by the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and Ananthram Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 (SC). In Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), the Supreme Court, while dealing with the provisions of the Orissa Sales Tax Art, 1947, which provided for imposition of penalty for failure on the part of a " dealer " to register himself as a dealer under the said Act, held that penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala High Court in CIT v. Gujarat Travancore Agency [1976] 103 ITR 149 (Ker) [FB], the Orissa High Court in CIT v. Ganga Ram Chapolia [1976] 103 ITR 613 [FB], the Gujarat High Court in Addl. CIT v. Patel Co. [1977] 107 ITR 214 [FB], the Madras High Court in Dutt v. CIT [1976] 103 ITR 634, the Gauhati High Court in Sewbalakram Co. v. CIT [1984] 146 ITR 148 and the Andhra Pradesh High Court in Addl. CIT v. Dargapandarinath Tuljayya Co. [1977] 107 ITR 850 [FB] have held that the burden is on the Department to establish prima facie that the assessee has, without reasonable cause, failed to furnish the return within the time specified in s. 271(1)(a) read with other relevant sections referred to in that section and once this initial burden has been discharged by the Department, it is for the assessee to show, as in a civil case by balance of probabilities, that he had reasonable cause for failing to file the return within the time specified. In Dutt v. CIT [1976] 103 ITR 634 (Mad), it has been pointed out that the Department can discharge this burden placed upon it by circumstantial evidence and that where a person has no explanation to offer, it may be treated as circumstantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself liable to penalty. But when the assessee shows that the cause shown was true and was reasonable, the burden will shift to the Department to prove that either the cause shown was not true or that, even if it was true, it was not a reasonable one so as to justify the assessee's failure to file or delaying filing return." Similarly, in Hanutram Ramprasad v. CIT [1978] 112 ITR 187 (Gauhati), another Division Bench of the Gauhati High Court has held that the ground for not filing the return within the time allowed is within the special knowledge of the assessee and the Department cannot know it and that when the ground is not disclosed by the assessee, which ground was within the special knowledge of the assessee, then the ITO can reasonably presume that he had no reasonable ground for his failure to furnish the return within time or that the ground if disclosed would show that it was unreasonable, that that presumption is, of course, a rebuttable presumption and the burden is upon the assessee to rebut the presumption. In other words, according to the said judgment, the initial burden of establishing its case can be discharged by the Department by relying upon the aforesaid pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable cause. The Department can discharge the aforesaid burden by circumstantial evidence. Since the reason for the failure to file the return is a matter within the special knowledge of the assessee, in cases where the assessee fails to file the return in spite of service of notice and fails to offer any explanation for his failure to file the return, a presumption may arise that the assessee had no reasonable cause for his failure to furnish the return within time and the onus placed on the Department would stand discharged. Similarly, in a case where the assessee offers an explanation for his failure to file the return and that explanation is found to be false or unreasonable, the onus which rests on the Department would stand discharged and it can be presumed that the assessee had failed to file the return without reasonable cause. If the facts of the present case are examined in the light of the aforesaid principles, we find that here the assessee had given two reasons for his failure to file fresh returns in response to the notice issued under s. 148 of the Act. One reason was that the notices were served on Gulab Chand who was not empowered to receive the said notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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