1. These are four appeals filed by the assessee. They arise out of the consolidated orders, both dated 4-2-1984 of the learned Commissioner (Appeals), New Delhi, for the assessment years 1970-71 and 1971-72. Two appeals relate to the penalty under Section 271(1)0) of the Income-tax Act, 1961 ('the Act') and two to the penalty under Section 273 of the Act.
2. The assessee Ravi Textile Co., 6926, Chandrawal Road, Delhi, is a private limited company. For the assessment years 1970-71 and 1971-72, returns were due to be filed on or before 30-6-1970 and 30-6-1971, whereas the returns were actually filed by the assessee on 3-10-1972 and 20-12-1973, respectively, after a delay of 26 and 29 completed months, respectively. Accordingly, the ITO initiated penalty proceedings under Section 271(1)(a) for both the years. For the assessment year 1970-71, the explanation of the assessee was that the accounts could not be closed because of certain unavoidable circumstances. For the assessment year 1971-72, its explanation was that the audit of the accounts was not completed and that it was completed only on 23-4-1973. However, the ITO did not accept these explanations and levied penalties of Rs. 19,327 and Rs. 34,568 at the rate of 2 per cent per month and restricted to 50 per cent of the tax.
3. On appeal, before the learned Commissioner (Appeals), firstly, it was stated that the penalties were barred by limitation. This contention was not accepted by the learned Commissioner (Appeals). On merits, the learned Commissioner (Appeals) held that so far as the assessment year 1970-71 was concerned, the auditor's certificate was dated 8-10-1971 and that even after the accounts had been audited the return was filed late by about a year for which no cause whatsoever had been shown. Even for the earlier period, the learned Commissioner (Appeals) held that it had not been indicated as to what the unavoidable circumstances were. So far as the assessment year 1971-72 is concerned, the learned Commissioner (Appeals) observed that it was not indicated as to why the audit of the accounts could not be completed earlier than 23-4-1973. He also observed that the assessee neither paid [the tax in advance nor by way of self-assessment or after the completion of the regular assessment. He, therefore held, that the assessee had no reasonable cause for either of the two assessment years. The penalties were, therefore, confirmed.
4. The ITO also initiated penalty proceedings for both the assessment years in question for the assessee's failure to file estimates of advance tax payable by it. After considering the assessee's explanation, the ITO, holding the defaults to be established levied penalties of Rs. 5,798 and Rs. 8,950 under Section 273(c) for the assessment years in question.
5. On appeal, the learned Commissioner (Appeals) noticed that the assessee-company was incorporated on 9-10-1967 and that its accounting year ended on 30-9-1968 relevant to the assessment year 1969-70. He also noticed that the first assessment, i.e., for the assessment year 1969-70 was completed on 29-3-1972 and, therefore, in respect of each of the assessment years in question, the assessee-company was a new assessee within the meaning of Section 212(3) of the Act as it stood before its omission by the Finance Act, 1978, with effect from 1-6-1978. He, therefore, held that the assessee was liable to penalty under Section 273(b) as it stood before its amendment by the Finance Act, 1969, with effect from 1-4-1970. Finding that the penalty imposed was the minimum, the learned Commissioner (Appeals) confirmed the penalty.
6. That is how the assessee-company has come up in appeals before us.
Shri C.S. Agarwal, the learned counsel for the assessee firstly submitted that the levy of penalties by penalty orders (all dated 18-3-1983) were time barred in terms of Section 275(a)(ii) of the Act under which the penalty orders were required to be passed within six months from the end of the month in which the order of the Tribunal was received by the Commissioner (Appeals). He argued that the limitation for the aforesaid periods could not be reckoned afresh from the date of the order passed by the learned IAC giving effect to the decision of the Tribunal, by treating the said order passed by the IAC as a fresh order of assessment under Section 143(3) of the Act. He submitted that the Tribunal had not set aside the original assessment as a whole but had merely desired recomputation of the allowable deduction for interest and, thus, the original order of assessment continued to survive leaving no room for a fresh order under Section 143(3). He also pointed out that in the original assessment orders for both the years, penalty proceedings under Sections 271(1)(a) and 273 had been initiated and, therefore, there was no further occasion to again initiate proceedings in giving effect to the order of the IAC. He argued that the fact that income had to be recomputed in accordance with the order of the Tribunal, did not mean that a fresh assessment order had to be passed specially when the Tribunal had itself not stated that the assessment was being set aside as a whole but had decided the issues involved and left certain calculations to be worked out by the lower authorities. Reliance was placed by him in support of the aforesaid arguments on the following decisions--Kooka Sidhwa & Co. v. CIT  54 ITR 54 (Cal.), Addl. CIT v. N.V. Ganapathi Rao  115 ITR 277 (AP), CIT v. Rajinder Kumar Somani  125 ITR 756 (Delhi) and S.Gurdial Singh v. WTO  6 ITD 305 (Delhi). He submitted that the penalty orders were also not passed within six months of the order dated 27-3-1981 of the IAC. On merits, Shri Agarwal reiterated the defence put forward on behalf of the assessee before the IAC.Additionally, so far as the penalties under Section 273 are concerned, he pointed out that no estimates were filed by the assessee for both the years and, therefore, the default was committed by the assessee under Section 273(6) whereas in the penalty orders, it was mentioned by the IAC as under Section 273(a). So far as the penalty under Section 271(1)(a) is concerned, apart from reiterating the arguments made before the income-tax authorities, Shri Agarwal relied upon the following decisions--CIT v. Vegetable Products Ltd.  88 ITR 192 (SC) and Addl. CIT v. Sohanlal Dugar  152 ITR 635 (Raj.). On the other hand, Shri M.M. Bharti, the learned departmental representative placed a strong reliance on the orders of the income-tax authorities.
He pointed out that the dispute had been restored to the assessing officer, after which he examined the assessee and so the whole of the assessment was to be reframed. He submitted that the express mention that the assessment order was being set aside was not necessary. He, therefore, argued that the period of limitation was to be reckoned from the final order. He also pointed out that no replies had been filed by the assessee to the initiation of the penalty proceedings made by means of the original assessment orders, and that no objection was taken by the assessee to the initiation of penalty proceedings by means of the order dated 27-3-1981. Reliance was also placed by him on the Division Bench decision of the Tribunal in Seth Panchhi Ram & Co. v. ITO  8 ITD 338 (Chd.).
7. We have considered the rival submissions as also the decisions referred to above. We have also looked into the original records made available to us by the departmental representative and referred to at the time of arguments. The assessee's objection as to limitation may be examined first. In that connection, it is necessary to examine certain dates which are given below:3-10-1972 Return filed for the assessment year 1970-71.27-3-1973 Assessment order passed by the ITO for the assessment year 1970-71.5-9-1973 Order of the AAC for the assessment year 1970-71 remand- ing the case to the ITO.16-7-1974 Remand report given by the ITO for the assessment year 1970-71.2-12-1975 Final order passed by the AAC for the assessment year 1970-71 and separate order passed by the AAC for the assessment year 1971-72.24-5-1978 Consolidated order passed by the Tribunal in IT Appeal Nos. 1188 and 1189 (Delhi) of 1976-77 for the assessment years 1970-71 and 1971-72.
Matter restored to the ITO for the purposes of working out the actual quantum of interest for both the years (vide paragraph Nos. 11 and 20 of that order).27-3-1981 Order of the IAC framing assessment separately for both the assessment years in the light of the order of the Tribunal.15-1-1982 Order of the Commissioner (Appeals) for the assessment years 1970-71 and 1971-72 against the orders dated 27-3-1981 of the IAC.While restoring the matter to the ITO for the purposes of working out the actual quantum of interest, the following observations were made by the Tribunal in paragraph Nos. 11 and 20 of its order. Paragraph No. 11 deals with the assessment year 1970-71 and paragraph No. 20 with the assessment year 1971-72: 11. After hearing the parties and on looking into the material on record, we hold: (i) The assessee's accounting being on mercantile basis and there being no dispute on the borrowals from H.B. Swarup, a liability did accrue to the assessee this year on account of interest due to the said creditor.
(ii) Such liability is to be allowed at 12 per cent on the relevant credit balance of the creditor, there being no dispute between the assessee and the creditor that the rate of interest would be 12 per cent.
We, however, find that for purposes of working out the actual quantun. the matter has to go back to the ITO again though, as rightly pointed out by Shri Agarwal, this would involve some hardship to the assessee. We find that it is necessary to send back the matter to the ITO because, firstly, as pointed out by Shri Agnihotri, the claim that Rs. 5,000 had been paid back to the creditor, been not made before the authorities below. It would be useful to have the account between the parties examined in the light of this information now made available. Secondly, the entries regarding interest debits noted by the Income-tax Officer in the assessment order vary from those accorded in the remand report.
Neither the assessment order nor the remand report states the actual opening and closing balance the assessee's account in the books of H.B. Swamp. We find, it would be necessary to reconcile the account of the assessee in the books of the creditor with the account of the creditor in the books of the assessee and then work out the interest on the relevant amount at 12 per cent and then allow such liability as a deduction against the profits this year. For this limited purpose, we are restoring the matter to the file of the ITO. He is directed to dispose of the assessee's claim in this regard in the light of the observations in this order.
20. The next objection relates to a disallowance of Rs. 34,502 on account of interest payable to H.B. Swarup. The ITO effected the disallowance following his order for the preceding year. We have already restored the dispute on such interest to the ITO. Hence, we restore the dispute for this year also in this regard to the file of the ITO (interest payable to H.B. Swarup). The ITO is directed to dispose of the assessee's claim in line with our observations and directions for the immediately preceding year.
Thus, though the assessment orders were not set aside as a whole, they were set aside in part, i.e., so far as the question of interest was concerned. We also find from the order dated 27-3-1981 of the IAC that he also rightly treated the matter as having been set aside for determining the correct amount of interest. He, therefore, mentioned in that order that assessments were being framed in view of the observations of the Tribunal. We need not go into the details of the finding of the IAC in that regard. In this connection it is also pertinent to notice that appeals were filed by the assessee before the Commissioner (Appeals) against the aforesaid orders dated 27-3-1981 of the IAC which were disposed of by his order dated 15-1-1982 by which income was reduced by Rs. 17,462 for the assessment year 1970-71 and by Rs. 2,891 for the assessment year 1971-72. In the case of Kooka Sidhwa & Co. (supra), the Calcutta High Court had held that where pursuant to the directions of the Tribunal to revise and amend the assessment, the ITO revises the assessment, the order passed by the ITO partakes the character of a fresh assessment order.
In the case of N.V. Ganapathi Rao (supra), the Hon'ble Andhra Pradesh High Court was considering the case of a remand and it is in that context that it held that the period of limitation of two years applied not only to the proceedings which were completed for the first time by the ITO but also to the proceedings that ensured pursuant to the remand order passed by the appellate authority remanding the matter to the lower authorities. In the case of Seth Panchhi Ram & Co. (supra), the assessment was completed on 17-3-1970 but the assessment as well as the penalty imposed in the course of assessment was set aside by the Tribunal. The Tribunal directed the ITO to make fresh assessment. The ITO completed the fresh assessment on 30-9-1974. The penalty proceedings had to be initiated in the course of de novo assessment and the IAC imposed penalty under Section 271(1)(c) on 23-5-1977. It was held that the penalty will not suffer from the bar of limitation of time in the present case, even though the assessment orders were partially set aside, the assessments were reframed and against which appeals were filed before the Commissioner (Appeals) (there being no further appeal to the Tribunal so far as the parties know) and, therefore, under Section 275(a)(i) the orders imposing the penalties under Sections 271(1)(a) and 273(c) could be passed within two years from the end of the financial year in which the proceedings were completed, i.e., by 31-3-1983, because this period expired later than the period which was reckonable under Section 215(a)(ii) with reference to the order dated 15-1-1982 of the Commissioner (Appeals). So, the penalty orders were well within time.
8. The next question which requires consideration is regarding the initiation of penalty proceedings, for the assessment year 1970-71. The original assessment order was passed on 28-2-1973. Notice was issued under Section 21l(\)(a) on 26-3-1973. On the same day, another notice was issued under Section 273 for failure to file estimate and reply was called for in 15 days. On 8-1-1975, another composite notice was given under Sections 271(1)(a) and 273(b) among others. After the order of the Tribunal, the assessment order was passed on 27-3-1981 where after separate notices were issued under Sections 273 and 271(1)(a) on 27-3-1981. Thereafter again, notices were given on 8-3-1973 under Sections 271(1)(a) and 273(c) among others. The combined reply to show-cause notices was filed on 15-3-1983. In the penalty order for the assessment year 1970-71, it was mentioned that the assessee furnished an estimate/statement of accounts of advance tax payable by it under Section 212(3A), which it knew or had reason to believe to be untrue.
Actually the default which was committed by the assessee was that of failure to furnish the statement of advance tax. The IAC held that the assessee had committed default under Section 273 (1)(a), i.e., for furnishing statement of advance tax which it knew or had reason to believe to be untrue. Penalty was levied accordingly in the amount of Rs. 2,899. So far as the assessment year 1971-72 is concerned, the original assessment was completed on 10-12-1974 and notices were issued among others under Sections 273 and 271(1)(a) on 10-12-1974. The assessee was given 15 days time to file reply. The notice under Section 273 was for failure to file estimate. Thereafter on 28-11-1979, fresh notices were issued among others under Sections 273 and 271(1)(a) on 10-3-1980. On 27-3-1981, the assessment order was passed wherein it was mentioned that among other sections, proceedings under Sections 271(1)(a) and 273(1)(a) had been initiated. On the same day, separate notices were issued for 29-4-1981, under Section 271(1)(a) for late filing of the return and also for not filing the estimate. Another notice was issued fixing 15-3-1983 on which date a combined reply was filed by the assessee. For this assessment year also, the penalty order says that during the course of the assessment proceedings, it was noticed that the assessee furnished an estimate of advance tax payable by it under Section 212(2), which it knew or had reason to believe to be untrue. The IAC again said that the assessee had committed default under Section 273(1)(a), i.e., for furnishing statement of advance tax payable by it which it knew or had reason to believe to be untrue. A penalty of Rs. 4,475 was levied. They show that though the penalties were rightly initiated under Section 273(6), but the matter was dealt with as if the default committed by the assessee was under Section 273(a). However, in appeal before the Commissioner (Appeals), no objection was taken on behalf of the assessee in this regard and the matter was argued on the basis of Section 273 (IX*).
9. We, therefore, find the initiation of the penalty proceedings to be quite valid. Before us, it was submitted on behalf of the assessee on merits, that it had reasonable and sufficient cause for not filing the estimate of income liable to advance tax and for not paying such advance tax, as the assessee was wholly unaware of the relevant provisions of the Act in this regard. It is not under dispute that the first assessment in the case of the assessee, i.e,, for the assessment year 1969-70, was completed on 29-3-1972 and, therefore, for each of the assessment years under consideration, the assessee was anew assessee within the meaning of Section 212(3). The assessee not having been able to substantiate the ground of ignorance, there was no reason why the penalty should not have been levied for default under Section 273(1)(6). We uphold the same.
10. So far as the penalty under Section 271(1)(a) is concerned, it was argued on behalf of the assessee that for the assessment years in question, there was sufficient and reasonable cause for the delay in filing the return because till October 1971/April 1973, the accounts could not be closed/ audited and that thereafter owing to certain unavoidable circumstances, the accountant who had been entrusted with this task, could not prepare the necessary papers for filing the returns of income. The learned Commissioner (Appeals) had found that for the assessment year 1970-71, the auditor's certificate was given on 8-10-1971 and even after the accounts had been audited, the return was filed late by about a year. The same was the position for the assessment year 1971-72. The assessee being a private limited company, the audit of its accounts was necessary and the report of audit had to be filed along with the returns. Considering these aspects, we are of the view* that so far as the assessment year 1970-71 is concerned, there was a reasonable cause for the delay up to 8-10-1971 for filing the return and, therefore, in the absence of a reasonable cause, thereafter, penalty, was leviable for the period 8-10-1971 to 3-10-1972. Similarly, so far as the assessment year 1971-72 is concerned, the audit was made on 23-4-1973, and since the reason for the delay thereafter has not been established, penalty was leviable under Section 271(1)(a) for the period 23-4-1973 to 20-12-1974. We, therefore, uphold the levy of penalty for the above periods which shall be calculated by the IAC.11. In the result, IT Appeal Nos. 1700 and 1701 fail and are dismissed, whereas IT Appeal Nos. 1702 and 1703 are partly allowed.