1. This is an appeal by the assessee pertaining to the assessment year 1975-76 against the order passed by the learned Commissioner (Appeals), confirming the penalty of Rs. 46,035 levied under Section 271(1) (a) of the Income-tax Act, 1961 ('the Act') by the ITO. (ii) Interest on loans given to Shakeel Pictures and Smt. Safrabi Haji Mastan.
(iii) Director's fee from F.M. Chinoy & Co. (P.) Ltd. and Bombay Garage (P.) Ltd. For the previous year relevant to the assessment year 1975-76 the assessee was under obligation to file the return under Section 139(1) of the Act. The ITO issued notice under Section 139(2) on 1-5-1975 directing the assessee to file the return within 30 days from the date of the receipt of the notice. The notice was served on 1-5-1975. So, the return was to be filed by the assessee on or before 31-5-1975. The assessee failed to file the return within time. The ITO issued notices under Section 142(1) of the Act. The first notice was issued on 22-8-1975 requesting the assessee to make compliance by 4-9-1975.
Thereafter, notice was again issued on 22-6-1976 requesting the assesseel to make the compliance by 7-7-1976. The ITO again issued notice on 23-7-1976 directing the assessee to make the compliance by 12-8-1976. By another notice issued on 23-8-1976, the assessee was requested to make the compliance by 10-9-1976. In spite of service of such notices, no compliance was made by the assessee. Neither the return was filed nor particulars were furnished by the assessee facilitating the completion of the assessment for the year under consideration. Thus, the ITO completed the assessment on a total income of Rs. 2,29,982 under Section 144 of the Act, vide his order dated 30-9-1976. At the time of completing the assessment he also initiated penalty proceedings under Section 271(1)(a).
3. Before the ITO in penalty proceedings under Section 271(1)(a), the assessee furnished explanation vide his letter dated 3-2-1979. In the said explanation it was submitted that in view of service of notice under Section 139(2), the return was to be filed by 31-5-1975. The same could not be filed because his client had no knowledge about the fact that the return of income was not filed by his previous representatives for the reasons best known to them, it was also submitted that his client was an illiterate person. As such, he absolutely relied on his representatives.
4. The ITO was not satisfied with the said explanation. According to him the previous representative of the assessee did send estimate for the assessment year 1975-76 on 2-11-1974 and he also appeared before the learned AAC on 9-12-1976. The learned ITO after considering all the facts was of the view that it was a fit case for levying the penalty.
Thus, he imposed a penalty of Rs. 46,035 under Section 271(1)(a).
5. Before the learned Commissioner (Appeals), again it was contended that the appellant was an illiterate person and as such he had relied on his representatives. Thus, it was contended that there were reasonable causes which prevented the assessee from filing the return.
The learned Commissioner (Appeals) was not satisfied with the contention advanced by the appellant. According to him, there was no evidence to show that the assessee had signed the return and had instructed his representative to file it. According to him, no evidence was produced to prove that the assessee has done his duty for completing the return. The learned Commissioner (Appeals) also pointed out that the assessee failed to comply with the notices issued by the ITO. The learned Commissioner (Appeals) also pointed out that no explanation came from the previous representative showing as to why and under what circumstances the return could not be filed. The learned Commissioner (Appeals) was of the opinion that in this case, the assessee in conscious disregard of his obligation failed to file the return within time. Thus, the learned Commissioner (Appeals) agreed with the finding of the ITO.6. Before the Tribunal on behalf of the appellant, more or less same submissions were advanced which were put forth before the authorities below. Thus, it was contended that there were reasonable causes which prevented the assessee from filing the return.
7. On behalf of the revenue it was contended that in the present case in spite of services of notices under Section 139(2), the assessee failed to file the return. Notices under Section 142(1) were issued but they also remained uncomplied with. Ultimately, the assessment had to be made under Section 144. According to the learned departmental representative, the income of the assessee was taxable and as such the assessee was under obligation to file the return. It was pointed out that in the present case the conduct of the assessee has been contumacious and dishonest. Thus, it was pointed out that the finding of the learned Commissioner (Appeals) is quite correct.
8. We have considered the rival submissions and perused the entire material on record. The facts as found by the authorities below are not in dispute. The assessee derives income from personal business which was estimated at Rs. 50,000. There was also interest income. He was also getting director's fees from the above two companies. There was also interest income on S.B. account. The assessment was completed at Rs. 2,30,173. The same was sustained in appeal. When the assessee failed to file the return under Section 139(1), the ITO issued notice under Section 139(2) on 1-5-1975. It was served upon the assessee on 12-5-1975. So, the assessee was under obligation to file the return by 31-5-1975. No such return was filed. Before the ITO the assessee did not take the trouble of appearing [to explain] as to why the return was not filed. The ITO issued notices under section 142(1) on 22-8-1975, 22-6-1976, 23-7-1976 and 23-8-1976 requiring the assessee to produce or cause to be produced such accounts or documents which may help him in completing the assessment. In spite of the service of such notices, the assessee failed to produce the documents and other materials specified in such notices. The assessee or his authorised representative never appeared before the ITO to explain as to why and under what circumstances the said notices were not complied with. Ultimately, the assessment was completed under Section 144 on a total income of Rs. 2,29,982 on 30-9-1976.
9 Section 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 its obligation. Reference may be made to the ratio of decisions in the cases of Hindustan Steel Ltd. v. State of Orissa  83 1TR 26 (SC) and Addl. CIT v. I.M. Patel & Co.  107 ITR 214 (Guj.) (FB).
10. In the present case the authorities below have pointed out the facts and circumstances to show prima facie that the assessee has without reasonable cause failed to furnish the return within time. In the case at hand we are of the definite view that the explanation of the assessee is not only false but the assessee in conscious disregard of his obligation failed to file the return under Section 139(2). The assessee was earning income from four sources discussed above. He was director of two companies. The assessment was completed on a total income of Rs. 2,29,982. It means the assessee was under obligation to file the return, within time as required under Section 139(1). When the assessee failed to file such return, notice under Section 139(2) was issued. Once the notice was served under Section 139(2), it was the duty of the assessee to file the return. If there was any difficulty in not filing the return, the assessee might have approached the ITO for extending the time for filing the return. At least the assessee could have requested for time to file the return on account of the reasons which may be sufficient for not filing such return. The assessee never took this trouble. Not only this, the assessee failed to make compliance of notice issued by the ITO under Section 142(1) from time to time. Ultimately, the assessment had to be completed under Section 144. No application under Section 146 of the Act was moved by the assessee.
11. The explanation given by he assessee was that he depended mainly on his previous representatives who failed to file the return. This explanation is false on the face of the record. At no stage the assessee was able to name the authorised representatives who were responsible for not filing such return. The so-called previous authorised representative never sent any letter either to the ITO or to the Commissioner showing the circumstances under which they failed to file the return. The assessee also never produced any evidence to show that really he has signed the return before handing over to his previous authorised representative. Even before the Tribunal, the present authorised representative or the assessee were not able to name the previous authorised representatives who failed to furnish the return. Moreover, when the notice under Section 139(2) was served on the assessee, he should have contacted his so-called previous authorised representative to find out whether return for this year was filed or not. No explanation whatsoever was given at any stage as to why the assessee failed to approach his previous authorised representative after service of notices under Section 139(2). The assessee failed to show by any evidence whatsoever that he was illiterate. As a matter of fact, this averment is false on the face of the record. The assessee is director in the above two companies. He was also having considerable income from personal business. Under the circumstances, it does not stand to reason that the assessee could be an illiterate person. In any view of the matter, before the authorities below or the Tribunal, no evidence was produced to show that the assessee was really an illiterate person. For the sake of argument it may be accepted for a while that the assessee was an illiterate person, in that case also once he was served with notice under Section 139(2), he was under obligation to contact his previous so-called authorised representative. The assessee never disclosed the name of the so-called previous authorised representatives. So, f the whole theory of the assessee that his previous representative was to file the return is improbable and not reliable at all. There is also no material to show that the so-called previous authorised representative under bona fide mistake, failed to file the return.
12. Looking to the aforesaid facts, evidence on record and the preponderance of probabilities, we are satisfied that the explanation given by the assessee was false. The assessee in the present case acted deliberately in defiance of law and was guilty of conduct contumacious or dishonest or acted in conscious disregard of his obligation. Thus, the learned Commissioner (Appeals) was quite correct in sustaining the order of penalty passed by the ITO under Section 271(1)(a).
13. For the reasons discussed above, the order appealed against will have to be sustained. Accordingly, it is sustained.