Commissioner of Income Tax vs Calcutta Motors

A.K. Mathur, C.J.—This is a reference u/s 256(2) of the income tax Act, 1961 (''the Act'') at the instance of revenue for calling the statement of case from the Tribunal for answer by this Court on the following two questions of law : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the averment of the affidavit and the medical evidence go unrebutted and in absence of any evidence in rebuttal, the Deputy Commissioner (Appeals) was perfectly correct in holding that the assessee/respondent was prevented by reasonable and sufficient cause in filing the belated returns and, accordingly, upholding the order of the Deputy Commissioner (Appeals) when the Assessing Officer could not examine the fresh evidence due to non-cooperation of the assessee and also further time sought by the Assessing Officer was denied to him by the DCIT(A) ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Deputy Commissioner (Appeals) was perfectly correct in holding that the assessee was prevented by reasonable and sufficient cause in filing the belated returns when the fresh evidence produced before him could not be examined by the Assessing Officer due to non-cooperation of the parties to it or by the Deputy Commissioner (Appeals) himself to his satisfaction by using his plenary powers in disposing of an appeal ?"

The assessee is a partnership firm engaged in purchase and sale of motor parts. For the assessment year 1981-82, return of income was filed on 28-12-1982 as against the due date 30-6-1981. Since the return was late, the Assessing Officer initiated penalty proceedings u/s 271(1)(a) of the Act, and a show-cause notice was issued and served on the assessee. A further opportunity was given on 30-12-1985. The assessee filed a written reply stating that extension of time was sought in Form No. 6 dated 26-6-1981 vide acknowledgement dated 31-8-1981 and, therefore, no penalty could be levied. No evidence was, however, produced before the Assessing Officer. The Assessing Officer, therefore, treated the assessee in default and levied penalty of Rs. 15,310 u/s 271(1)(a) for the default of 17 months.

Aggrieved by the order passed by the Assessing Officer, the assessee filed an appeal before the Deputy Commissioner (Appeals) before whom affidavit of Satpal Gulati - one of the partners - was filed to the effect that since he had a heart problem, therefore, he could not attend the business and return could not be filed in time. It was also submitted that on account of non-cooperation of accountant Bansal, the account could not be completed. It is alleged that the delay in filing the return was bona fide one. The Deputy Commissioner (Appeals) accepted the affidavit and set aside the penalty. Against the order of the Deputy Commissioner (Appeals), an appeal was preferred by the department and the said departmental appeal was rejected by the Tribunal on the ground that the revenue had an opportunity to deny the affidavit but that was not done and, therefore, the affidavit of the assessee was accepted and the delay was condoned and the penalty was set aside.

The Tribunal was approached u/s 256(1) for stating the case before this Court on the aforementioned questions of law. The application of the department was rejected. Hence, the department has approached this Court u/s 256(2) for calling the statement of the case on the aforesaid two questions of law from the Tribunal.

We have heard the learned counsels for the parties and perused the record. It is true that proper application for condoning the delay in filing the return along with affidavit was not filed before the Assessing Officer, therefore, he levied penalty for filing belated return. However, thereafter when the matter was taken up in appeal by the assessee before the Deputy Commissioner (Appeals), the assessee filed affidavit of Satpal Gulati to the effect that because of illness of managing partner Ramesh Chandra Gulati who had a heart problem he could not attend to the business. Hence, return could not be filed in time. It is also pointed out that unfortunately the Accountant did not cooperate and this resulted in delay and that was found to be a justified reason by the Deputy Commissioner as well as by the Tribunal. Thus, both the questions are questions of fact and there is no reason to take a different view from the view taken by the Tribunal and the Deputy Commissioner (Appeals). Both the questions are essentially the questions of fact and no question of law is involved therein. Consequently, the application u/s 256(2) is dismissed.