TMI Blog1984 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee was required to file the return in respect of the assessment year 1962-63 by August 31, 1962. An application in Form No. 6 for extension of two months' time for filing the return was submitted on August 31, 1962, and extension was sought on the ground that the accounts of the assessee were under audit. The Income-tax Officer (ITO) granted two months' time as prayed for filing the return. The return was not filed till the expiry of the time granted to the assessee. The return was filed on February 24, 1965. As there was default in filing the return within the extended time, the ITO under s. 271(1)(a) read with s. 274 of the I.T. Act, 1961 (XLIII of 1961) (which will hereinafter be referred to as " the Act "), initiated penalty proceedings. In pursuance of the notice, written reply dated February 23, 1967, was filed. It was stated, inter alia, in the reply that the return of the firm (assessee) could not be filed on account of disputes amongst the partners as some partners did not co-operate in submitting the full particulars regarding the transactions done through them and this constituted " reasonable cause " for not filing the return in time. The ITO was not satisfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required the Tribunal to state the case on the question stated hereinabove and to refer it to this court for decision. We have heard the learned counsel for the Revenue as well as Shri S. K. Kackar appearing for the assessee. In the written reply to the notice, the assessee has, inter alia, stated that the return of the assessee-firm could not be filed because of disputes amongst the partners as some partners did not co-operate in submitting the full particulars regarding the transactions done through them. The ITO in his order, annex. B, dated March 20, 1967, has stated that no evidence was produced before him in support of the fact that it was on account of the disputes amongst the partners as some partners did not co operate in submitting the full particulars regarding the transactions done through them. The ITO took into consideration that the assessee was carrying on its business regularly and as such it can safely be presumed that regular accounts must have been maintained. To quote from the order of the ITO : " The assessee is maintaining regular books of account and the return has been filed as late as on February 25, 1965. Since the business was carried on regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was serious dislocation both as regards the business and as to its accounts and that it is clear from the evidence, that the returns could not be filed within the time allowed to the assessee, as the accounts were not completed on account of disputes among the partners. He, therefore, agreed with the conclusion recorded by the Accountant Member. The question that arises is whether on the averments made by the assessee to show that his failure to file the return in respect of the assessment year 1962-63, an inference of reasonable cause as envisaged by s. 271(1)(a) of the Act can be drawn ? Here, it will be useful to examine as to what constitutes " reasonable cause ". While dealing with the word "reasonable " in Stroud's judicial Dictionary, IV edition, at page 2258-2259, it is stated as under : " The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those circumstances of which the actor, called on to act reasonably, knows or ought to know. Learned counsel for the assessee, however, invited our attention to Dinabandhu v. Jadumoni, AIR 1954 SC 411, where their Lordships while dealing with s. 85, proviso, of the Representation of the Peo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d company which was sent to the assessee mentioning that in view of the continuing disputes between the partners of the firm, the company could not place any further reliance on the ability of the assessee-firm to carry out the company's work at Badwasi. The fifth letter (C-5) dated December 19, 1965, was from the same company to the assessee in which the working arrangement with regard to the management of the affairs of the firm by various partners was evolved. It is pertinent to mention that in these letters there is no reference to any dispute amongst the partners of the assessee-firm regarding accounts and affairs for the accounting year relevant to the assessment year 1962-63. It is also significant to note that the assessee submitted an application to the ITO for extension of time for filing the return stating that the accounts were under audit. It would not be unreasonable to infer from that application that at the time of the submission of the application for extension of time, there were no disputes amongst the partners for the accounting year relevant to the assessment year 1962-63 and also for the reason that had the accounts been not complete, there was no occasion for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139. The Tribunal did not take this fact into consideration that the return which was filed by the assessee contained a note to the effect that it was a duplicate return as the original return had been filed on December 29, 1962. This shows that the assessee has taken an inconsistent stand. It is clear that the assessee did not furnish the return, though it was obligatory on it to do so under s. 139(1) of the Act. The case relates to the assessment of a firm. Its business was continuing and the assessment was made. Apart from that, for the assessment year 1962-63, when the application was submitted to the ITO for extension of time, the facts relating to the disputes between the partners and it was because of the non co-operation of the partners of the assessee, the return could not be filed, were not stated. The letters which were duly considered by the AAC have no bearing for determining the question of reasonable cause under s. 271(1)(a) relating to the assessment year 1962-63. The cumulative effect of all this is that it cannot (sic) be said that the assessee had failed to furnish the return of income in respect of the assessment year 1962-63 without reasonable cause. We, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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