Jammu & Kashmir H.C : The petitioner-firm which was engaged during 1970-71 in the execution of contract works was also doing transport business and filed its return for the said year on January 27, 1974, and was assessed on an income of Rs. 61,940.

High Court Of Jammu & Kashmir

Mohd. Umar & Co. vs. Income Tax Officer & Anr.

M.A. Shah, J.

Section 271(4A)

Writ Petn. No. 151 of 1976

27th October, 1988

Counsel Appeared

Subash Dutt for the Petitioner : T.S. Tahakur for the Repsondents

M. A. SHAH, J.:

The petitioner-firm which was engaged during 1970-71 in the execution of contract works was also doing transport business and filed its return for the said year on January 27, 1974, and was assessed on an income of Rs. 61,940. The assessing authority, ITO, B-Ward, Jammu, found that the assessee failed to submit the return and true accounts within the time prescribed and, therefore, allowing extension of about four months imposed penalty for late filing of the return to the tune of Rs. 5,225 by his order under s. 271(1)(a) of the IT Act, 1961 (for short hereinafter called “the Act”). After the said order, on an application of the petitioner, the CIT, Amritsar, by his order dated October 9, 1975, rejected the prayer of the petitioner for condonation of delay and condoning the penalty under s. 271(4A) of the Act. The petitioner, being aggrieved against the said order, filed this petition.

In short, the main contention of learned counsel for the petitioner is mainly based on the ground that the learned CIT failed to exercise jurisdiction vested in him on a wrong interpretation of law and thus the order is liable to be quashed. It is submitted that the order has been passed under the impression that the provisions of section 271(4A) of the Act are attracted for new assessees only and not for those who are old assessees. This is reflected by the order itself and, therefore, it is submitted that the order deserves to be quashed in this petition.

On the point in controversy is the pari materia provision of the WT Act, 1957, learned counsel for the petitioner placed reliance on reported decision of this Court in the case of Ghulam Mohd. Sheikh vs. CWT 1977 CTR (J&K) 166 : (1977) 109 ITR 395. It is pointed out that the said authority applies with full force in the instant case as the provisions of section 271(4A) of the Act are equally applicable to old assessees and not confined to give the benefit to new assessees only. It is also declared at the Bar that after the decision of this Court, the benefit is given in the subsequent years to all assessees alike.

Learned counsel for the respondents, while replying to the said arguments and resisting the petition, submitted that the words of section 271(4A) of the Act can only be attracted when the return is not filed within the prescribed time under s. 139(1) of the Act and the words are such that they apply to new assessees and not to those who have been following the procedure of filing the return within the time prescribed and then failed without reasonable cause for filing the return. In the instant case, it is pointed out that the delay was of 15 months and the explanation given for the delay was only confined to the fact that the attorney of the petitioner who was conversant with the accounts remained busy in elections during the general elections in March, 1972, and, therefore, could not file the return in time. The assessing authority has taken into consideration the reason shown and has given the margin of four months for the said purpose and imposed penalty holding the delay of eleven months. The CIT was, therefore, not obliged to condone the delay and the penalty imposed for the unexplained period of eleven months and thus no illegality is committed in arriving at the said conclusion by the learned CIT. Regarding the authority cited of Ghulam Mohd Sheikh (supra), it is submitted that the analogy cannot be drawn for the purpose of the IT Act.

Giving my anxious thought to the rival arguments advanced and considering the provisions of s. 271(4A) of the Act, when I read the authority cited of Ghulam Mohd. Sheikh (supra), find that the provisions of s. 18(2A) of the WT Act are in pari materia with the provisions of s. 271(4A) of the Act. I do not want to burden the order by detailing the above two provisions as the ratio of the said authority as to the applicability of the provision equally applies to the facts and circumstances of the present case. The learned CIT concentrated in his order only on the point that the petitioner is not entitled to get the benefit of condonation of penalty simply on the ground that he is an old assessee. The following words in the order impugned passed on October 9, 1975, are clearly indicative of the approach of the learned CIT : “The assessee has been assessed to tax for a number of years prior to the asst. yrs. 1970-71 and 1971-72. By filing a belated return under s. 139(1), the assessee cannot be considered to have made any voluntary disclosure.”

The order, in my opinion, suffers from two infirmities. Firstly, because the approach of the learned CIT is not in accordance with the provisions of s. 271(4A) of the Act and, secondly, the order is not speaking order. It is not disputed that the disclosure made by the petitioner by filing the late return was voluntary. It is not accompanied by any prior notice by the Department asking the petitioner for filing the return. It is thus clear, that the disclosure was voluntary and a prayer was specifically made by the petitioner to the learned CIT after the imposition of penalty by the assessing authority. The assessing Authority also, in his turn, concentrated in granting condonation for four months only on the aspect of the petitioner being busy in the elections of 1972 whereas he has completely failed to take into consideration the other reasons projected that the partners of the firm left their business activities due to the Indo-Pak War in December, 1971. The learned CIT has not even taken the trouble to go through any of the grounds so agitated by the petitioner praying for condonation of penalty. It is, therefore, significant from the order impugned that the CIT concerned, firstly, failed to exercise jurisdiction vested in him by law by confining the provisions to new assessees and not giving the benefit to old assessees as the petitioner was and, secondly, that he has failed to give cogent reasons for rejection of the prayer of the petitioner for condonation of penalty.

Under the above noted circumstances, I find force in the arguments advanced by learned counsel for the petitioner and that the authority cited of Ghulam Mohd. Sheikh (supra) applies with full force to the instant case and hold that respondent No. 2 was not justified in refusing to consider the prayer of the petitioner under s. 271(4A) of the Act on merits under a misconception of law. The impugned order passed by the learned CIT on October 9, 1975, therefore, deserves to be quashed being illegal.

In the result, the writ petition succeeds and the impugned order dated October 9, 1975, passed by the CIT-I, Amritsar, is hereby quashed and respondent No. 2 is hereby directed to reconsider the application of the petitioner for granting to him the benefit of section 271(4A) of the Act and decide the application on merits after consideration according to law.

The parties, however, are left to bear their own costs.

[Citation :181 ITR 146]

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