Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the penalty levied under s. 271(1)(a) for the asst. yr. 1970-71?

High Court Of Madras

CIT vs. P. Joseph Swaminathan

Section 271(1)(a)

Asst. Year 1970-71

K.A. Swami, C.J. & Kanakaraj, J.

Tax Case No. 685 of 1982

7th March, 1997

Counsel Appeared

J. Jayaraman, for the Applicant : K.R. Ramamani, for the Respondent

K.A. SWAMI, C.J.:

The following question has been referred for our decision :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in cancelling the penalty levied under s. 271(1)(a) for the asst. yr. 1970-71?”

2. The return ought to have been filed on 16th Aug., 1970 for the asst. yr. 1970-71, whereas it was filed on 30th Dec., 1972. The assessee applied for extension of time for filing the return. The ITO granted time till 15th Nov., 1970. However, the assessee filed the return as pointed out above, only on 30th Dec., 1972. Therefore, the ITO levied the fine (sic)on accepting the explanation for the period upto 30th June, 1971, for the period from 1st July, 1971 to 30th Dec., 1972 for the delayed filing of the return. Whereas in the appeal, the AAC found that the delay for the period from 1st July, 1971 to 31st Dec., 1971 has been properly explained. Therefore, he levied the penalty for the belated filing of return only for the period from 1st Jan., 1972 to 30th Dec., 1972.

3. When the matter was carried to the Tribunal by the assessee relating to the penalty, the Tribunal took the view that the period of delay from 1st Jan., 1972 to 30th Dec., 1972 has also been properly explained.

4. We have been taken through the order of the Tribunal. The Tribunal has gone on the basis of due date and has observed that the assessee had reasonable cause for not filing the return on the due date and as such there was no delay. That reasoning of the Tribunal cannot be accepted to be correct. The law as explained by the Supreme Court in Addl. CIT vs. I.M. Patel & Co. (1992) 105 CTR (SC) 195 : (1992) 196 ITR 297 (SC) : TC 49R.673 is that there is nothing in s. 271(1)(a) of the IT Act, 1961, which requires that mens rea has to be established by the Department, before penalty can be levied under that section for delay in filing the return and that it is for the assessee, who files a belated return, to show “reasonable cause” for the delay. Therefore, the reasoning of the Tribunal based upon the decision of the Gujarat High Court in Addl. CIT vs. I.M. Patel & Co. 1977 CTR (Guj) 320 (FB) : (1977) 107 ITR 214 (Guj) : TC 49R.676, which stands over ruled in the aforesaid decision of the Supreme Court cannot be approved as correct. Be that as it may, the Tribunal has also recorded another finding in para. 4 of its order that the reasonable cause has been shown for the delay in filing the return on 30th Dec., 1972. It has concluded thus : “On the facts of the case it is clear that there was no conscious or deliberate disregard of the statutory obligation on the part of the assessee in submitting the return. That the assessee had reasonable cause for not filing the return on the due date being admitted and finding that the assessee had suffered a shock on account of his wife’s death, it would be absolutely unjust without further facts to hold that the state of shock could exist or continue to exist for a particular period of time and not thereafter as seems to have been done by the AAC. The assessee must, therefore, be held to have reasonable cause justifying the delayed submission of the return and the penalty is liable to be cancelled on this point.”

5. The aforesaid finding being a finding of fact, it cannot be disturbed.

6. We, therefore, answer the reference in the affirmative.

[Citation : 232 ITR 958]

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