P N SIKAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE two matters have been referred to us at the instance of the assessee under S. 256(1) of the IT Act, 1961 (to be referred to in brief as "the Act"). The point in issue in both these IT Ref. is the same, though the questions have been worded differently. The three questions referred for our opinion in IT Ref. No. 83 of 1972 are as follows :

(2.) THE assessee in IT Ref. No. 83 of 1972 is Shri P. N. Sikand and the assessment year is 1963 -64, the relevant accounting year ending on 31st December, 1962. The return of income for the said assessment year should have been filed on or before 30th June, 1963. On request, the time for filing the return was extended till 30th September, 1963. However, the assessee did not file any return by that date. The ITO, thereafter, issued a notice under S. 139(2) of the Act dated 19th March, 1964, which was served on the assessee on 25th March, 1964. This notice required the assessee to file a return within 30 days of receipt of the notice. In compliance, the assessee filed a return on 30th March, 1964. On completion of the assessment proceedings, the ITO issued a notice under S. 274(1) r/w S. 271 (1)(a) of the Act asking the assessee to show cause why penalty should not be levied for failure to file the return within time. This notice was duly served on the assessee on 17th January, 1968. The assessee did not furnish any explanation. However, the ITO gave the assessee another opportunity to represent his case on 28th June, 1969. But even on that date no one appeared for the assessee nor was any reply filed. In these circumstances, the ITO presumed that the assessee had no explanation to offer and imposed a penalty of Rs. 23,473, i.e., 2 per cent of the tax for every month of the five months' delay.

(3.) IN IT Ref. No. 109 of 1972, the assessee, M/s Nathmal Girdhari Lal, is a firm carrying on business in the manufacture of buckets. The assessee had to file its return on or before 30th June, 1963, with regard to the asst. year 1963 -64. The assessee had applied for extension of time and the time for filing the return was extended till 31st July, 1963. On 18th September, 1963, the ITO issued a notice under S. 139(2) of the Act. In accordance with this notice, the return had to be filed by 28th October, 1963. But the assessee filed the return on 22nd February, 1965. The ITO completed the assessment on 30th December, 1967, and initiated penalty proceedings for delay in the filing of the return. The notice under S. 274 r/w S. 271(1)(a) was duly served but the assessee failed to file a reply. Thereafter, the ITO issued a reminder asking the assessee to attend on 26th November, 1969. The assessee's counsel attended but the ITO did not find the explanation offered satisfactory. He, therefore, imposed a penalty of Rs. 22,186. This was calculated at 2 per cent of the tax for every month of 19 months' delay, not exceeding in the aggregate 50 per cent of the tax. On appeal, as the income of the assessee was reduced by the AAC, he also reduced the penalty accordingly. The period of default was also curtailed to 18 months as a month's extension had been granted by the ITO. The further appeal by the assessee to the Tribunal was dismissed as being without merit.