1. This is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, in which the following question of law, arising from the order of the Tribunal, has been referred to this court for its opinion :
' Whether, on the facts and in the circumstances of the case, the Tribunal was correct and justified in holding that the penalty order of the Income-tax Officer was illegal '
2. We have been taken through the order of the Income-tax Appellate Tribunal and also the order under Section 271(1)(a) dated September 14, 1967, passed by the Income-tax Officer, Jorhat. The Tribunal in para. 15 of its order has found that the Income-tax Officer had passed his aforesaid order imposing penalty without indicating the period of delay and the basis for the calculation of penalty, and that the Income-tax Officer did not judicially exercise his power for imposition of penalty.
3. From the assessment order and the notice of demand in this case, it is manifest that the return for the assessment year 1962-63 had not been
filed by the assessee until the assessment order had been made. The assessment was completed on March 10, 1967, which is a matter of record, while the return had to be filed by August 30, 1962, giving due allowance for the two months' extension that was granted for that particular year. The period of default in filing the return is, therefore, a matter of simple calculation, on the basis of facts manifest from the records. There can be no dispute whatsoever that there was a default of over 54 months in filing the return for the assessment year 1962-63.
4. The next question is whether the failure to furnish the return, as aforesaid, was without reasonable excuse. The assessee tried to show that although there was a default for the aforesaid period, she did have reasonable cause for that delay. The submission in this respect by the assessee was that the person who used to file the return on her behalf was ill for quite a long period and that later on he expired. It was due to this unfortunate illness and ultimate demise of the accountant, who was entrusted with the filing of the return, that the delay had taken place. The Income-tax Officer, and as we find, the Appellate Assistant Commissioner and also the Tribunal, did not consider that this was a reasonable cause as contemplated under Section 271(1)(a) of the Income-tax Act.
5. The last and most important question that falls for determination is what was the basis for calculation of the penalty imposed by the Income-tax Officer. The Tribunal held that since the basis for calculation of the penalty was not recorded explicitly by the Income-tax Officer, the imposition of the penalty itself was bad in law. We should examine the scheme of Section 271(1)(a) and Clause (i) in order that we may properly appreciate this aspect of the matter. Under Section 271(1)(a) read with Clause (i) thereof, once the Income-tax Officer has arrived at his satisfaction that there had been a failure to furnish the return for a particular assessment year without reasonable cause, he may direct the imposition of penalty. The discretion of the Income-tax Officer to levy or not to levy a penalty is thus preserved by this section. However, if a decision is reached to levy a penalty, it cannot be less than the prescribed minimum. Therefore, the omission on the part of the Income-tax Officer to record specifically the basis for his calculation of the penalty is not material in any manner whatsoever. Where the basis of the calculation has been laid down in the statute itself and, more so, where the quantum has been fixed as in Section 271(1)(a)(i), there can be no legal requirement for the Income-tax Officer to indicate what was the basis for his calculation, since a mere reference to the statutory provision and the uncontroverted facts apparent from the records would make the position abundantly clear. We are, therefore, of the opinion that the Income-tax Officer's order imposing the penalty cannot
be assailed on the grounds that have been set out in para 15 of the Tribunal's order.
6. Before parting with this reference, we would like to observe that although the Income-tax Officer's order, as such, is not assailable, if as a matter of fact, the tax payable by the assessee for the assessment year 1962-63 had been reduced by any appellate authority, there would be consequent reduction in the amount of penalty imposable on the said assessee. No doubt, before a penalty is finally levied, this aspect of the matter will be given due consideration.
7. Our answer to the question will, therefore, be in the negative, subject to our observations regarding the reduction, if any, of the tax payable and consequent reduction of the penalty leviable thereon under Section 271(1)(a)(i) of the Income-tax Act, 1961.
D. Pathak, J.
8. I agree