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Commissioner of Income-tax, Gujarat Vs. C. Shantilal and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberIncome-tax Reference No. 215 of 1975
Judge
Reported in(1982)28CTR(Guj)165; [1983]141ITR476(Guj)
ActsIncome Tax Act, 1961 - Sections 139(2), 271(1) and 274
AppellantCommissioner of Income-tax, Gujarat
RespondentC. Shantilal and Co.
Appellant Advocate B.R. Shah, Adv.
Respondent AdvocateNone
Excerpt:
- - [1977]107itr214(guj) ,it is clear that penalty for failure to furnish the return within the time specified by law could have been imposed only if it was shown that the assessee had either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of his obligation to file the return in time. failure without reasonable cause to furnish the return in time is an ingredient of the offence and the legal burden is on the department to establish by leading some evidence that, prima facie, the assessee had without reasonable cause failed to furnish the return with in the time specified......the penalty could not have been imposed. it has not been urged on behalf of the revenue that this view of tribunal is not justified in law or that one period of default could be togged on with the other or that if togged on if would be possible to levy penalty. under the circumstances, it would appear that the tribunal was justified in law in taking the view that the delay in furnishing the return being of a period shorter than one month, the assessee was not liable to be visited with any penalty. 9. in the light of the foregoing discussion, in our opinion, the tribunal was right in law in cancelling the penalty. under the circumstances the questions are answered as under : question no. 1 : in the affirmative, that is to say, in favour of the assessee and against the revenue. question.....
Judgment:

P.D. Desai, J.

1. The Income-tax Appellate Tribunal has referred the following two questions of law for our opinion :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the order levying penalty under section 271(1)(c) of the Act

(2) Whether there was any material for the Tribunal to come to the conclusion that there was reasonable cause for the assessee not to file its return of income till November 14, 1966 ?'

2. The assessment year with which we are concerned herein is assessment year 1966-67, the relevant previous year being S.Y. 2021.

3. This reference arises out of penalty proceedings taken against the assessee in respect of a default under s. 271(1)(a) of the Act. The following table would furnish the relevant factual data required to be taken into consideration for the purpose of answering the question :

------------------------------------------------------------------------S.No. Particulars Date------------------------------------------------------------------------1. Last date for furnishing the return ... 30-6-19662. Application for extension of time for furnishing thereturn up to 30-9-1966 ... 29-6-19663. Extension of time deemed to have been granted up to ... 30-9-19664. Notice under section 139(2) served on ... 14-10-19665. Time for furnishing the return in pursuance of thenotice expired on ... 14-11-19666. Return furnished on ... 1-12-19667. Penalty levied under section 271(1)(a)(i) ... 31-1-1966------------------------------------------------------------------------

4. In view of the delay in furnishing the return, the ITO issued showcase notice under s. 271 read with s. 271(1). The assessee, in response to the notice, submitted a written explanation in the following terms :

(1) An application for extension of time having been made on June 29, 1966, and the said application having not been rejected, the assessee presumed that the time for furnishing the return was extended up to December 30, 1966.

(2) Notice under section 139(2) having been served upon the assessee on October 14, 1966, the assessee presumed that the return could be furnished on or before November 14, 1966.

5. In the light of the above explanation, the assessee submitted that there being less than one month's default in furnishing the return, the assessee was not liable to be visited with any penalty.

6. The ITO rejected the explanation submitted by the assessee. In appeal, the order of the ITO was confirmed by the AAC. On further appeal, however, the Income-tax Appellate Tribunal quashed the order levying penalty. The view of the Tribunal was, (a) that the assessee was justified in presuming that the time to furnish the return was extended up to September 30, 1966 ; (b) that though no return was furnished on or before September 30, 1966, before the period, a notice under s. 139(2) was issued on October 14, 1966 ; (c) that upon receipt of the notice, the assessee bona fide believed that it was entitled to furnish the return within thirty days of the service of such notice and that there was, therefore, reasonable cause for not furnishing the return up to November 14, 1966 ; (d) that though no return was furnished on November 14, 1966, before the expiry of the period of one month of the default thereafter, the assessee furnished the return on December 1, 1966 ; (e) that, therefore, there being less than one month's delay in furnishing the return (for which there was no reasonable cause), the assessee was not liable to any penalty under s. 271(1)(a).

7. In view of the decision of the Full Bench of this court in Addl. CIT v. I. M. Patel and Co. : [1977]107ITR214(Guj) , it is clear that penalty for failure to furnish the return within the time specified by law could have been imposed only if it was shown that the assessee had either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of his obligation to file the return in time. Failure without reasonable cause to furnish the return in time is an ingredient of the offence and the legal burden is on the Department to establish by leading some evidence that, prima facie, the assessee had without reasonable cause failed to furnish the return with in the time specified. Against this background we must examine the questions.

8. Now, in the instant case, for the two periods, namely, July 1, 1965, to September 30, 1966, and October 14, 1966, to November 14, 1966, there was material before the Tribunal to come to the conclusion that there was reasonable cause for the assessee not to furnish its return of income within the time specified by law. The material consisted of the written explanation furnished by the assessee to the ITO in response to the show-cause notice issued under s. 274. The Tribunal was justified in acting upon the said material in reaching the conclusion that it did in regard to the said periods. With regard to the periods from October 1, 1966, to December 1, 1956, the Tribunal's view was that each period covered a distinct and independent default and that since each default was of less than one month's duration, the penalty could not have been imposed. It has not been urged on behalf of the Revenue that this view of Tribunal is not justified in law or that one period of default could be togged on with the other or that if togged on if would be possible to levy penalty. Under the circumstances, it would appear that the Tribunal was justified in law in taking the view that the delay in furnishing the return being of a period shorter than one month, the assessee was not liable to be visited with any penalty.

9. In the light of the foregoing discussion, in our opinion, the Tribunal was right in law in cancelling the penalty. Under the circumstances the questions are answered as under :

Question No. 1 : In the affirmative, that is to say, in favour of the assessee and against the Revenue.

Question No. 2 : In the affirmative, that is to say, in favour of the assessee and against the Revenue.

10. There will be no order as to the costs of the reference in view of the fact that the assessee is not represented at the hearing.


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