Commissioner of Income Tax vs P. Joseph Swaminathan

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 Appellate Tribunal was right in cancelling the penalty levied u/s 271(1)(a) for the

assessment year 1970-71 ?

The return ought to have been filed on August 16, 1970, for the assessment year 1970-71, whereas it was filed on December 30, 1972. The

assessee applied for extension of time for filing the return. The Income Tax Officer granted time till November 15, 1970. However, the assessee

filed the return as pointed out above, only on December 30, 1972. Therefore, the Income Tax Officer levied the penalty on accepting the

explanation for the period up to June 30, 1971, for the period from July 1, 1971, to December 30, 1972, for the delayed filing of the return.

Whereas in the appeal, the Appellate Assistant Commissioner found that the delay for the period from July 1, 1971, to December 31, 1971, has

been properly explained. Therefore, he levied the penalty for the belated filing of return only for the period from January 1, 1972, to December 30,

1972.

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

January 1, 1972, to December 30, 1972, has also been properly explained.

We have been taken through the order of the Tribunal. The Tribunal has gone on the basis of the 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 CIT (Addl.) v. I. M. Patel and Co. : [1992]196ITR297(SC) is that there is nothing in

section 271(1)(a) of the Income Tax 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. Commissioner of Income Tax, Gujarat

Vs. I.M. Patel and Co., , which stands overruled 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 paragraph 4 of its order that reasonable cause has been shown for the delay in filing the return on

December 30, 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 Appellate Assistant Commissioner. 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.

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

We, therefore, answer the reference in the affirmative.