TMI Blog1981 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly held that it would be throwing an impossible burden on the revenue to prove the absence of reasonable cause for late filing of the return of income by the taxpayers ? and (3) Whether the Tribunal, on the facts of the case, rightly upheld the levy of penalty of Rs. 12,040 under section 271(1)(a) of the Act in this case ?" In this case we are concerned with the assessment years 1965-66 and 1966-67. The Tribunal passed a common order confirming the levy of penalties for 1965-66 and 1966-67 but the assessee has sought reference only in respect of the assessment year 1966-67 in which year a penalty for default was levied for the late filing of the return under s. 271(1)(a) to the extent of Rs. 12,040. The return for the year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on June 25, 1970, as a result of an heart attack. It was also mentioned in the certificate that the Mehtaji had been suffering for the last about five years before his death from this trouble. The AAC confirmed the imposition of penalty and he observed that it was the responsibility of the partners to file the return, not of the accountant, that is, the Mehtaji. It was confirmed primarily on the ground that the assessee had not established any reasonable cause for the late filing of the return. The matter was taken in further appeal to the Income-tax Appellate Tribunal and while confirming the order of the AAC, the Tribunal observed that there were as many as six partners looking after the appellant firm's business and it was not shown to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return in time, but, further, refuse to acknowledge the show-cause notice issued to explain the case. The provisions contained in section 274 which govern the procedure for levying the penalty clearly indicate that the initial onus of giving reasonably plausible explanation lies on the defaulting assessee and if such onus is not chosen to be discharged, then the taxing authorities shall proceed to levy penalty as provided under the Income-tax Act." The Tribunal ultimately confirmed the order of the AAC imposing penalty of Rs. 12,040 on the assessee-firm. It is common ground before us between Mr. Pathak for the assessee and Mr. Raval for the revenue that in the quantum matter the assessment against the firm has been reduced in revision pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'failure without reasonable cause' in section 271(1)(a) constitute an ingredient of the offence or not. Looking to the wording of the section and on a plain reading of section 271(1)(a), it is obvious first that the failure to file the return may be with reasonable cause or without reasonable cause, but the offence for which the penalty is imposable is failure without reasonable cause to file the return within the time specified in the section and, therefore, it is for the revenue to establish as an ingredient that the failure in the particular case was without reasonable cause. Once the department has discharged that initial burden, it will be for the assessee to show that there was reasonable cause on his part in failing to furnish the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Secondly, s. 271(1)(a) provides for penalty in cases where the assessee has either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of his obligations. Thirdly, the legal burden is on the department to establish by leading some evidence that prima facie the assessee has without reasonable cause failed to furnish the return within the time specified in s. 271(1)(a) read with the other relevant sections referred to in that section. Once this initial burden, which may be slight, has been discharged by the department, it is for the assessee to show, as in a civil case, on balance of probabilities, that he had reasonable cause for failing to file the return within the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden shifted to the assessee it has discharged that burden by leading evidence about the explanation does not arise for consideration. Under these circumstances, in the light of the principles laid down by the Full Bench in I.M. Patel and Co.'s case [1977] 107 ITR 214 (Guj), it must be held that the revenue has failed to establish its case regarding the imposition of penalty. We, therefore, answer the questions referred to us as follows: Question No. (1)-In the negative, that is, in favour of the assessee and against the revenue; Question No (2)-In the negative, that is, in favour of the assessee and against the revenue; Question No. (3)-In the negative, that is, in favour of the assessee and against the revenue. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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