SUBRAMONIA IYER V Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) A question of law of importance which is not free from difficulty in answering has been referred to us by the Income-tax Appellate Tribunal, Cochin Bench, in relation to the imposition of penalty on an income-tax assessee for the two years 1966-67 and 1967-68, under Section 271(1)(a) of the Income-tax Act, 1961, for short " the Act ". That question reads as follows :

(2.) FOR the two years 1966-67 and 1967-68, notices had been issued under Section 274 read with Section 271, on March 30, 1970, requiring the assessee to show cause why an order imposing penalties on him should not be made under Section 271 of the Act. These notices were issued because the return that was due to be filed on June 30, 1966, for the year 1966-67, was filed only on March 21, 1970, and the return due for the year 1967-68 on June 30, 1967, was filed only on January 22, 1969. It appears that the assessee filed his representations pointing out why penalties should not be imposed, on March 20, 1971. Without considering this representation the Income-tax Officer imposed a penalty limited to 50 per cent. of the net tax payable for the year 1966-67, and a penalty of Rs. 5,364 for the year 1967-68. Appeals were taken by the assessee before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner apparently after considering the representation of the assessee, though -he does not refer to it in terms, but accepting the facts stated therein that the assessee was prevented by reasonable cause from filing the return within the time stipulated, cancelled the orders imposing penalties. There was a further appeal before the Tribunal and the Tribunal considered the claim of the assessee that he was prevented by reasonable cause from filing the return and came to the conclusion that no reasonable cause had been shown for the entire delay. But the Tribunal found that the real delay was only of 12 months' duration. With this aspect we are not concerned in this reference. The question mooted before us was considered by the Tribunal in paragraph 8 very briefly. We shall extract the relevant part of that paragraph.

(3.) PASSING on to the first question as to whether an order passed in violation of the principles of natural justice provided by the statute would be void, we shall refer to the decision of the Supreme Court in Nawabkhan Abbaskhan v. State of Gujarat, AIR 1974 SC 1471,relied on by the counsel for the assessee in support of his argument that it is void. Paragraph 14 of the judgment in that case makes a distinction between the two types of orders, one in violation of the fundamental right and also in violation of the principles of natural justice and the other in violation of the principles of natural justice but not involving the infringement of any fundamental right. The learned judge, V. R. Krishna Iyer, made a distinction between these two types of orders and while pronouncing on the question of infringement of the fundamental right in the judgment, the learned judge merely referred to the distinction and contented himself by stating that the position may be different where there has been no infringement of the fundamental right. This is the passage (page 1477) :