1. This is a reference made by the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, under Section 256(2) of the I.T. Act, 1961, for short 'the Act'.
2. In compliance with the direction of the High Court made in Civil Rule 1(M) of 197-5, the learned Tribunal drew up a statement of the case and forwarded the same, along with the question which the High Court had formulated for determination. We extract the question :
'Whether, on the facts and in the circumstances of the case, there was any material or basis for the Income-tax Appellate Tribunal to hold that the penal provisions of the Act under Section 271(1)(a) were attracted ?'
The reference is from the order of the Tribunal passed under Section 254 of 'the Act'. It is needless to say that our jurisdiction is only advisory and not appellate. It is also beyond question that a reference to this court is only competent on a question of law. This court cannot go beyond the findings of fact reached by the Tribunal. However, decisions based purely on conjectures, suspicions or irrelevant materials or decisions reached by the Tribunal ignoring the relevant material constitute an issue which may be an issue of law. If the Tribunal ignores or excludes admissible and relevant evidence and takes into consideration material irrelevant to the inquiry or considers material which is irrelevant to the inquiry, then this court can treat the same as a question of law and deal with the order of the Tribunal accordingly. Similarly, if it appears that the Tribunal has acted without any evidence or upon a view of the facts which could not be reasonably entertained, the question becomes a question of law which is examinable by the High Court. Similarly, if the facts found are such that no person
acting judicially and properly instructed in law could have reached the conclusion under appeal, the High Court must intervene. It is also settled law that the court cannot go beyond the Tribunal's findings of fact barring the circumstances alluded and other exceptional circumstances. It is also settled law that no question can be referred to a High Court or entertained by it under Section 256 of the Act unless it arises out of an order of the Tribunal. Therefore, a question of law can arise out of a Tribunal's order only if it was dealt with by the Tribunal or was raised before it, though not decided ; a question of law not raised before the Tribunal and not dealt with by it in the order cannot be said to arise out of its order, though on the facts and circumstances of the case stated in the order, the question may fairly arise. There is a line of decisions to point and we refer to only a few of them : Ramanathan Chettiar v. CIT : 63ITR458(SC) , Karuppan Chettiar's Estate v. CIT : 72ITR403(SC) , CIT v. Kamal Singh Rampuria : 75ITR157(SC) .
3. Bearing in mind the principles aforesaid let us proceed to dispose of the question referred to us. The relevant facts necessary for answering the question are set out.
4. The assessee filed his return for the assessment year 1965-66, on September 18, 1969. In view of considerable delay in the filing of return, the ITO issued a notice for levy of penalty under Section 271(1)(a). Thereafter, a date was fixed for showing cause against the levy of penalty on May 4, 1970. Neither the assessee nor any representative appeared on that day. Even no application was filed by the assessee showing cause or explaining the delay in submitting his return and/or showing any cause why the proposed penalty should not be levied. Situated thus, the Income-tax Officer, for short, ITO, had no other alternative but to hold that the assessee had no explanation to offer nor had he any ground to show why the proposed penalty should not be levied on him. Accordingly, the ITO levied a penalty of Rs. 3,223 under Section 271(1)(a) of 'the Act'. It is indisputable that the delay in filing the return was 47 months, that is about 4 years. The penalty was levied at 50% of the tax payable by the assessee. Against the order of the ITO the assessee preferred an appeal before the AAC. It was urged on behalf of the assessee that no penalty could be levied on the authority of Kulu Valley Transport Co. P. Ltd. : 77ITR518(SC) . The AAC held that the ratio of the decision was inapplicable and dismissed the appeal and confirmed the penalty order passed by the ITO. Thereafter, the assessee preferred an appeal to the Income-tax Appellate Tribunal, Gauhati, being ITA Case No. 604 (Gauhati) of 1972-73. It was urged by the assessee that the penalty could not be levied on the assessee merely because there was some delay in filing the return in the absence of a positive and affirmative finding that the assessee had acted
deliberately in defiance of law or acted in conscious disregard of his legal obligation. In support thereof, counsel for the assessee relied on Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) . It was also urged that no show-cause notice for the levy of penalty was served on the assessee. The learned Tribunal rejected the contentions of the petitioner. It held that the show-cause notice had been duly served on the assessee by registered post. The Tribunal also reached the conclusion that there was an inordinate delay of 47 months in filing the return. There was no explanation offered by the assessee why there was delay in filing the return. It also held that the assessee did not submit or show any cause against the levy of penalty notwithstanding receipt of the notice. These factors were considered as enough to hold that the assessee had acted in complete disregard of law.
5. It follows, therefore, that the Tribunal held that there was a long delay, there was no explanation for the delay offered by the assessee either to 'the ITO' or to the AAC or before the Tribunal. These factors were considered to be sufficient to bring the case within the purview of Section 271(1)(a) of the Act. It is undoubtedly true that if there is some delay in filing the return it cannot, by itself, be sufficient to penalise a person. Similarly, if there is delay and the assessee explains the delay which may be reasonably true, the question of penalty may not arise. However, the cumulative effect of the circumstances set forth above was considered by the Tribunal as sufficient to bring the case within the purview of Section 271(1)(a) of 'the Act'. If an assessee makes default in submitting a return within the prescribed period and offers no explanation at all to the ITO or to the AAC or even before the Tribunal, can it be said that the assessee had reasonable cause for non-furnishing the return as required under the provisions of the law The learned Tribunal also took into consideration that the assessee himself submitted his return of income as Rs. 27,620, which was above the taxable limit. Therefore, the assessee had taxable income according to his own calculation. 'Absence of reasonable cause' is a sine qua non of the penal provision and mere non-furnishing or delay in furnishing the return is not enough. However, the question is was there any reasonable cause for the failure to furnish the return Here is a case when an assessee having taxable income and being obligated to file it within the prescribed period did not furnish the return nor did he furnish any explanation whatsoever for the delay and submitted the return after a long delay of 41 months. The taxable income was not a borderline one. Even before the Tribunal, the assessee offered no explanation for the delay to give it jurisdiction to consider the cause and to do the needful. In this setting, the learned Tribunal reached the conclusion that there was 'absence of reasonable cause' to furnish the return.
Now, what could be the just, fair and reasonable conclusion from the facts
and circumstances of the case Can we say that no reasonable person properly instructed in law could have reached the conclusion We are afraid we cannot reach that conclusion. The inaction of the assessee, on the facts and circumstances of the case, cannot but be deliberate. The assessee did not care to submit any explanation and thereby defied the authority of the ITO, the AAC and the Tribunal. Situated thus, the learned Tribunal had to confirm the penalty.
6. In Hindustan Steel : 83ITR26(SC) , which has been referred before us, the petitioner had failed to register itself as a dealer under the Sales Tax Act, acting on the honest and genuine belief that the company was not 'a dealer'. It submitted an explanation arid even the Tribunal reached the conclusion that it had acted 'prudently'. The company relied on the 'General terms of the Rules and Directions for the Guidance of the Contractors' and claimed that it had just and reasonable cause for believing that the company was not required to be registered as a dealer. Their Lordships held that the Tribunal as well as the High Court were oblivious of the important piece of evidence, namely, that the company had reasonable ground to believe that it was not liable to be registered as a dealer. In our opinion, therefore, the principles of law laid down by their Lordships are not applicable to the instant casein the instant case there was a delay, long delay, and there was no explanation thereof. Even a notice to show cause why penalty should not be levied on the assessee was served on him on May 4, 1970, Yet he defaulted to appear or to offer any explanation nor did he send any representative nor asked for adjournment to offer explanation. These acts and conduct of the assessee are writ large. The assessee offered no explanation even to the AAC or to the learned Tribunal.
7. Learned counsel for the assessee has brought to our notice the statement of fact submitted by the assessee, after the determination of the case by the Tribunal, explaining why he could not submit the return in time find what prevented him to offer any explanation. However, all these facts were stated after the disposal of the appeal by the Tribunal. These facts, therefore, were not before the Tribunal when it decided the appeal. We are of the opinion that we cannot take note of the facts set forth in the statement of facts submitted by the assessee after the disposal of the appeal by the Tribunal, as we are concerned with the questions of law arising out of the order of the Tribunal.
8. In the result, we answer the question in the affirmative and answer that the learned Tribunal had sufficient material to hold that the provisions Section 271(1)(a) were attracted.
9. Before parting, we record that on November 10, 1982, learned counsel for the assessee stated that it was a fit case in which the assessee could have gone to the Commissioner of income-fax under s, 273A of the Act, asking for a- reduction or waiver of the penalty. We, as desired by the learned counsel for the assessee, allowed the assessee to approach the Commissioner of Income-tax and to get the relief, if allowable under the law. However, we are told at the bar that the prayer has been rejected by the Commissioner, because he did not find any reasonable cause to reduce or waive the penalty imposed on the assessee,
10. In the result, having answered the question in the affirmative, we direct that a copy of the judgment be sent under the seal of the court and signature of the Registrar to the learned Tribunal,' which shall pass orders as are necessary to dispose of the case conformably to the judgment.
J.C. Das, J.
11. I agree.