TMI Blog1980 (4) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... s been rightly placed by the Tribunal upon the assessee? (3) Whether, on the facts and in the circumstances of the case the Tribunal has correctly interpreted the expression 'the amount of tax payable' in section 271(1)(a)(i) to mean the tax payable on the date of final assessment?" In Income-tax Reference No. 109 of 1972, the question on which our opinion is sought is : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the penalty under section 271(1)(a) could be levied for failure to file the return under section 139(1) even after the notice under section 139(2) had been issued by the Income-tax Officer, and whether could it be said that with the issue of notice under section 139(2), the default committed under section 139(1) did not come to a close." The assessee in Income-tax Reference No. 83 of 1972 is Shri P. N. Sikand and the assessment year is 1963-64, the relevant accounting year ending on 31st December, 1962. The return of income for the said assessment year should have been filed on or before 30th June, 1963. On request, the time for filing the return was extended till 30th September, 1963. However, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 969. The assessee's counsel attended but the ITO did not find the explanation offered satisfactory. He, therefore, imposed a penalty of Rs. 22,186. This was calculated at 2 per cent. of the tax for every month of 19 months' delay, not exceeding in the aggregate 50 per cent. of the tax. On appeal, as the income of the assessee was reduced by the AAC, he also reduced the penalty accordingly. The period of default was also curtailed to 18 months as a month's extension had been granted by the ITO. The further appeal by the assessee to the Tribunal was dismissed as being without merit. The main point urged on behalf of the assessees is that with the issue of a notice under s. 139(2), the default under s. 139(1) ceases to exist. In other words, it is submitted that since there is only one return and this is filed, thereafter, in response to the notice under s. 139(2), there cannot be any default under the provisions of s. 139(1). In fact, learned counsel went so far as to suggest that, by exercising his discretion and issuing notice under s. 139(2), the, ITO has in effect condoned the delay which has already taken place under s. 139(1) of the Act. This contention is sought to be supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts income voluntarily under section 139(1) and the default committed in not filing the return cannot be taken note of for initiating proceedings for imposition of penalty and that the period of default shall cease from the date when the notice under section 139(2) issued by the Income-tax Officer to the assessee requiring it to furnish a return of its income within 30 days from the date of service of the notice." Learned counsel for the assessee suggested that the matter required reconsideration in view of the decision of the Patna High Court in Addl. CIT v. Bihar Textiles [1975] 100 ITR 253, wherein it has been held that a default under s. 139(1) comes to an end or ceases after, a notice under s. 139(2) has been served. After considering the matter carefully, we find ourselves unable to agree with this view. Recently the Madras High Court in R. Lakshminarayana Reddiar v. CIT [1980] 121 ITR 767 has referred to the decisions of the various High Courts, especially that of the Patna High Court and differed from it. In fact, following the decision in CIT v. Indra and Co. [1971] 79 ITR 702, of the Rajasthan High Court and the above-mentioned decisions of this court, as also the Andh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamber Lal, learned counsel for the assessee, in I.T. Reference No. 83 of 1972, next urged that the initial onus of establishing the lack of reasonable cause was on the I.T. authorities, and this had not been properly discharged. He submitted that penalty proceedings being of a quasi-criminal nature, it was for the revenue to establish the absence of reasonable cause. In this connection, he relied on a Full Bench decision of the Gujarat High Court in Addl. CIT v. I.M. Patel and Co. [1977] 107 ITR 214 and a decision of the Rajasthan High Court in CIT v. Rawat Singh and Sons [1979] 120 ITR 65. The Full Bench of the Gujarat High Court in the above-mentioned case has opined that " failure without reasonable cause " to furnish the return in question is an ingredient of the offence and that s. 271(1)(a) provides for penalty only in cases where the assessee has acted dishonestly or in a contumacious manner or in deliberate defiance of law or in conscious disregard of its obligation. It has further held that the legal burden is on the department to establish prima facie that the assessee has acted without reasonable cause. Once this initial burden which is slight, is discharged, it is for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite another opportunity to represent his case, he neither appeared nor filed a reply. On the basis of these facts, which have been brought on record, it would be legitimate to infer that the department has shown that the assessee had no reasonable cause for filing the return late. The conduct of the assessee clearly indicates that he was conscious of his obligation and acted in total disregard of it. In the facts and circumstances of the case, the slight initial onus had been discharged by the department and it was for the assessee to show that he had reasonable cause for filing the return late. This he failed to do. In the result, we answer question No. 2 in I.T. Reference No. 83 of 1972, in the affirmative and in favour of the revenue. Question No. 3 in I.T. Reference No. 83 of 1972 is not pressed by the learned counsel for the assessee in view of the retrospective amendment of the section subsequent to the decision of the Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. As the other questions have been answered in favour of the revenue, it will be entitled to one set of costs in I.T. Reference No. 83 of 1972. Counsel's fee Rs. 300. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
