SARMA J. - After disposal of the I.T.A. No. 47 (gau) of 1971-72, the Tribunal Gauhati, has made this reference under s. 256 (1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee to answer a question of law said to have arisen out of its order passed in the said appeal. The question is as below :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty under s. 271(1)(a) of the I.T. Act, 1961, can be imposed in spite of the filing of the return within the time allowed under s. 139(4) of the I.T. Act, 1961, taking into consideration the decision of the Supreme Court in the case of CIT v. Kulu Valley Transport Co. P. Ltd. : 77ITR518(SC) ?"
The assessee is a partner in a firm known as M/s. Saraf Motor Company. He filed his I.T. return relating to the assessment year 1962-63, on April 20, 1965. The return should have been filed in June, 1962. Even after issue of notice under s. 139(2) of the Act, he went on defaulting and so the ITO initiated a penalty proceeding under s. 271(1)(a) of the Act. In the penalty proceeding the assessee pleaded before the ITO that the return could not be filed as the share income from the firm in which the assessee was a partner was not received in time. The ITO rejected this plea and held that there was no reasonable cause for the delay in filing the return and more so when he did not care to apply for extension of time. In this view of the case, the ITO imposed a penalty of Rs. 14,996, which was 50% of the tax demanded of the assessee under s. 271(1)(a) of the Act.
The assessee pleaded before the AAC against the penalty order. At it appears from the order of the AAC, the learned counsel for the assessee pleaded only for reduction of the quantum of penalty and no other point was urged. The AAC by his dated November 8, 1971, passed in the appeal directed the ITO to reduce the quantum of penalty proportionately, as the assessee was given some relief in respect of the assessment made for the relevant year.
Being aggrieved by the order of the AAC, the assessee filed the afore-mentioned I.T.A. No. 47 (Gau) of 1971-72, on the ground, inter alia, that the assessee filed the return within the time allowed under s. 139(4) of the Act and, therefore, no penalty could be imposed under s. 271(1)(a). The assessee also pleaded that he was prevented by sufficient cause from filing his return within the time allowed under s. 139(1) or s. 139(2) of the Act. The penalty imposed was also challenged on the ground that it was excessive.
On May 1, 1973, when the appeal was taken up for hearing, the learned counsel appearing for the assessee submitted before the Tribunal that the observation of the AAC that the assessee pleaded only for reduction of the penalty before him and did not urge any other point is not correct. He wanted time to file an affidavit sworn by the lawyer who appeared before the AAC for the assessee in support of this contention. The Tribunal acceded to this prayer and adjourned the case till July 2, 1973. As neither the assessee nor his counsel appeared on this date and as no step was taken, the Tribunal proceeded to dispose of the appeal ex parte on a consideration of the materials on record. In the absence of any affidavit from the lawyer concerned the Tribunal accepted the statement of the AAC that no other point was urged before him in connection with the penalty proceeding except praying for proportionate reduction of the penalty. In that view of the matter, the Tribunal held that the assessee was not entitled to urge before it that he had any reasonable cause for not filing the return in time. The Tribunal held, accepting the finding of the ITO, that there was no reasonable cause for the delay in submission of the return by the assessee. The other legal ground taken by the assessee, namely, that no penalty could be imposed as the assessee filed his return within the time allowed under s. 139(4) of the Act was rejected by the Tribunal following its earlier decision in I.T.A. Nos. 6608 (Gau) and 6609 (Gau) of 1970-71. The Tribunal accordingly upheld the order of the AAC and dismissed the appeal.
Being aggrieved by the order of the Tribunal, the assessee filed an application under s. 256(1) of the Act praying for referring to the High Court two question, said to be question of law, arising out of the order of the Tribunal. The questions are as below :
"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in as in sustaining the order of penalty under s. 271(1)(a) of the I.T. Act, 1961 ?
(ii) Whether the Tribunal can entertain a pure question of law and/or mixed questions of fact and law which was not dealth with by the AAC ?"
The Tribunal held that the question No. (ii) was too vague and so it could not be referred to the High Court. So far as the question No. (i) is concerned, the Tribunal held that the question as to whether the assessee had or had not any reasonable cause for not filing the return in time is a question of fact. The Tribunal having held that he had no reasonable cause, no question relating to this finding could be referred. The Tribunal was, however, of the opinion that in view of the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. : 77ITR518(SC) , the question as to whether the return filed under s. 139(4) should be treated to have been filed within the time allowed under s. 139(1) or s. 139(2) of the Act, to exonerate the assessee from penalty under s. 271(1)(a), which is a question of law, does arise out of its order and, accordingly, it referred the question as mentioned above.
A similar question was referred to us by the Tribunal in I. T.R. No. 22 of 1973 (Hanutram Ramprasad v. CIT (Gau)) disposed of on September 17, 1975. In that case, this court answered the question in the affirmative, i.e., in favour of the revenue. That decision fully covers the present reference and on that ground alone the present reference must be answered in the negative, in our opinion.
Mr. S. K. Sen, the learned counsel for the assessee, was conscious of the limitation imposed by our above decision. He, therefore, tried to make his submission without relying on the decision of the Supreme Court in CIT v. Kully Valley Transport Co. P. Ltd. : 77ITR518(SC) . He made his submission giving his own interpretation on the relevant provisions of ss. 139 and 271(1)(a) of the Act and urged before us to consider the question without reference to the above decision in CIT v. Kulu Valley Transport Co. P. Ltd.  70 ITR 518. He also submitted that the decision of this court in is not applicable in the present case, as in that case, the assessee did not submit any explanation, whereas in the present case the assessee submitted an explanation for not filing the return in time, as required under sub-ss. (1) and (2) of s. 139.
We are unable to accept the contention of Mr. Sen that the decision of this court in Hanutrams case is not applicable in the present case. The question referred in that case is very much the same with the question that has been referred in this case. Be that as it may, we propose to deal with the submissions which were made before us by Mr. Sen.
His first contention was that the satisfaction of the ITO that the assessee had no reasonable cause for not filing the return within the time allowed, is a condition precedent to the imposition of penalty under s. 271(1)(a) and, therefore, in disposing of the appeal it was incumbent on the Tribunal to examine on the materials on record as to whether or not the assessee had such reasonable cause. According to him, the Tribunal was wrong in recording its finding that the assessee had no such reasonable cause simply relying on the finding of the ITO on the assumption that the assessee did not urge this point before the AAC. It was further contended by Mr. Sen that the finding of the Tribunal that the question as to whether or not there was any reasonable cause is purely a finding of fact, is not tenable. According to him, it is a mixed question of law and fact.
If the assessee wants to challenge the above finding of the Tribunal he should have applied for a reference of the specific question under s. 256(1). As held by the Supreme Court in the case of CIT v. Greaves Cotton & Co. Ltd. : 68ITR200(SC) , a finding of fact may be defective in law if there is no evidence to support it or if the finding is unreasonable or perverse, but it is not open to the assessee to challenge such a finding unless he has applied for a reference of the specific question under s. 66(1). In the instant case, the assessee did not do so. Be that as it may, we are unable to hold that the Tribunal was wrong in accepting the finding of the ITO as to reasonable cause when the assessee did not challenge the said finding before the AAC in the first appeal.
Mr. Sen also urged on an interpretation of the words "within the time allowed" occuring in the second clause of s. 271(1)(a) that it means the time allowed by the ITO as well as by the statute. He argued that the statute itself, under the provisions of s. 139(4), allows time to the assessee to file his return at any time within 4 years from the end of the assessment year before the assessment is made and, therefore, the assessee having filed his return within such time, the imposition of penalty should have been held to be illegal by the Tribunal event if it was found that he had no reasonable cause for not filing the return within the time allowed under sub-ss. (1) and (2) of s. 139.
This question is not res integra. Besides our own decision in Hanutrams case , the Gujarat High Court in Addl. CIT v. Santosh Industries : 93ITR563(Guj) held :
"The words written the time allowed........ by sub-s. (1) of s, 139 in the second clause of s. 271(1)(a), according to their plain natural menaing, must be taken to refer to the time specified in sub-s. (1) of s. 139 or extended by the ITO under the proviso to that sub-section and not so as to include the time within which the return of income may be filed under sub-s. (4) of s. 139."
Similarly, in CIT v. Gangaram Chapolia : 103ITR613(Orissa) , a Full Bench of the Orissa High Court Held :
"The plain and natural meaning of the expression excludes the time within which a return may be filed under s. 139(4) to come within the ambit of s. 139(1). The context and setting give a contrary indication. If that was the intention, the legislature could have used in s. 271(1)(a) an expression like if a person without reasonable cause fails to furnish the return of income within four years, from the end of the assessment year, he shall be liable to penalty. Legislative could have easily referred to returns under s. 139(4) and (5) in s. 271(1)(a) as it did in case of returns under s. 139(1) and (2).
If s. 139(4) had not been on the statute book, the assessee would have been precluded from filing the return after the expiry of the time allowed under s. 139(1) and (2). The concession given under s. 139(4) is restricted to the assessment and cannot be availed of by the assessee for all purpose under the Act including the penalty proceeding. If the assessees interpretation is to be accepted the time limit prescribed in s. 139(1) and (2) would be otiose and wholly unnecessary except for purposes of charging interest."
We are in respectful agreement with the view taken in the aforesaid decision. Thus, even if we consider the question referred to us bereft of the clause "taking into consideration the decision of the Supreme Court in the case of CIT v. Kuly Valley Transport Co. P. Ltd. : 77ITR518(SC) ", it must be answered in the affirmative. No other point was urged by Mr. Sen.
In the result, we answer the question referred to us in the affirmately, i.e., in favour of the revenue. The reference is disposed of accordingly. Send a copy of this order to the Tribunal for its information.
K. LAHIRI J. - I agree.