LAWS(GJH)-1992-11-14

COMMISSIONER OF INCOME TAX Vs. YOGENDRAKUMAR H THAKKAR

Decided On November 11, 1992
COMMISSIONER OF INCOME TAX Appellant
V/S
YOGENDRAKUMAR H. THAKKAR Respondents

JUDGEMENT

(1.) AT the instance of the Revenue the following question is referred to this Court under S. 256(1) of the IT Act :

(2.) THIS reference pertains to two asst. yrs. 1967 68 and 1969 70. The assessee had filed his returns late. The return for the asst. year 1967 68 was filed on 7th May, 1968 and for the asst. yr. 1969 70, it was filed on 7th March, 1972. As there was delay in filing the returns, show cause notices were issued to the assessee under S. 271(1)(a) of the Act. Relying upon the decision of the Supreme Court in the case of CIT vs. Vegetable Products Limited 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC), the ITO held that the penalty leviable was nil for both those years. After those orders were passed by the ITO, S. 271(1)(a) was amended retrospectively, i.e., from 1st April, 1962. As a result of that amendment, for the purpose of computation of penalty, what was required to be considered was the tax as reduced by tax deducted at source or paid in advance and not the tax paid along with the returns. Rectification proceedings were, therefore, initiated and for the asst. year 1967 68 the ITO levied penalty of Rs. 1,635 and for the asst. year 1969 70 the penalty levied was Rs. 4,355. The assessee, therefore, preferred an appeal to the AAC but without any success as the appeal came to be dismissed. The assessee thereupon preferred two separate appeals to the Appellate Tribunal. It was urged before the Tribunal that penalty was levied without recording a finding that the assessee had no reasonable cause for late filing of the returns. The Tribunal relying upon the decision of this Court in the case of Addl. CIT vs. I.M. Patel & Co. 1977 CTR (Guj) 320 (FB) : (1977) 107 ITR 214 (Guj)(FB) held that the Department having failed to establish that the failure to file the return within time was without reasonable cause, the penalty orders were illegal. The Tribunal, therefore, allowed both the appeals. The CIT therefore, moved the Tribunal by making two separate applications to refer the above referred question to this Court.

(3.) IT was, however, urged by the learned counsel for the assessee that while passing assessment orders, the ITO had charged interest under S. 139 of the Act in both these cases. That would imply that the ITO had extended the time for filing the returns under S. 139(1) of the Act and, therefore, really the penalty provision was not attracted at all as the returns must be deemed to have been filed within the extended period of time. The learned counsel for the Revenue, however, submitted that no such plea was specifically taken either before the AAC or before the Tribunal and, therefore, we should not consider that plea now and send the matter back to the Tribunal for considering the same. It is no doubt true that such a plea was not specifically taken before the tax authorities or before the Tribunal. However, it is an admitted position that interest was levied under S. 139 of the Act. The ITO could not have levied interest without applying the proviso which provides for extension of time. Though there is no material on record to show that the assessee had applied for extension of time, we will have to presume that the ITO had passed the order in lawful exercise of his powers and, therefore, a presumption will have to be raised that time for filing the return was extended by the ITO. Once such a presumption is raised, it will have to be further held that the returns were filed within the extended period of time and, therefore, the provision of levying penalty did not become applicable. No doubt the presumption be raised is a rebuttable presumption and it can be rebutted by the Department, but there is no material on the basis of which we can say that the Department has rebutted such a presumption in this case. As a presumption will have to be raised in this case because of charging of interest, it will have to be further held that the assessee had filed the returns within the extended period of time. Considering this fact and the fact that these two cases pertains to asst. yrs. 1967 68 and 1969 70, we do not think it fit to send the matter back to the Tribunal. Therefore, even though the basis on which the Tribunal set aside the order of the ITO is found to be wrong, the order passed by it will have to be held as proper in view of the facts and circumstances of the case. We accordingly answer the question referred to us in the affirmative i.e., against the Revenue and in favour of the assessee, with no order as to costs.