TARABEN RAMANBHAI PATEL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) ALL these petitions arise out of a common grievance made by the petitioners by which they were called upon to pay penalty in exercise of the powers under S. 271(1) of the IT Act, 1961 (hereinafter referred to as "the Act"). According to the petitioners, the impugned action of the respondents is ultra vires, contrary to law and violative of Arts. 14, 265 and 300 A of the Constitution of India.

(2.) SINCE common point is raised in all the petitions though petitioners are different, in our opinion, it would be proper if all the petitions are disposed of by a common judgment.

(3.) MR . R.D. Pathak, learned counsel for the petitioner, contended that there is an error apparent on the face of record committed by the authorities below in imposing penalty on the petitioners. He submitted that relevant materials which ought to have been considered by the authorities have been ignored, irrelevant and extraneous matters were kept in mind and so called finding is recorded which is not borne out by the evidence on record. Such finding cannot be said to be a finding based on the material on record and must be termed as "perverse". He also submitted that almost in similar circumstances, other AAC granted relief in favour of other co owners and also in favour of some of the petitioners. He invited our attention to an order passed by the CIT(A), Baroda on 6th Nov., 1987, by which he disposed of 29 appeals. In those cases also, orders imposing penalty were passed under S. 271(1)(a) of the Act and the aggrieved party had approached the appellate authority by filing appeals. It was submitted before the appellate authority that the dispute was going on regarding property and the matter was pending in the High Court of Bombay and the Court receiver was appointed. Because of the appointment of receiver by the Court, the IT returns could not be submitted within the stipulated period and it could be said to be sufficient cause and the ITO committed an error in imposing penalty holding that there was no reasonable cause in not submitting return in time. The appellate authority, after considering the submissions of the appellant, specifically observed that the ITO was not right in holding that the cause for non filing of return of income was of usual nature and was a (sic) ground to escape from payment of penalty. It was not probable that the appellants would intentionally withhold returns of income. Appellate authority also observed : "I have no hesitation in agreeing with the plea of the learned counsel of the appellants that they were prevented by sufficient cause in filing returns of income". Accordingly, appeals were allowed. The order passed by ITO was set aside and the penalty was ordered to be deleted. Mr. Pathak submitted that unfortunately the appeals from which the present petitions arise were placed for hearing before another AAC. Had they been placed before the same officer, in all probability, they would have been allowed. Mr. Pathak submitted that the case of the petitioners is almost identical to the case of 29 appellants whose appeals came to be allowed by appellate authority and there is no earthly reason for not showing similar treatment and extending identical benefits which were granted in favour of those appellants. But Mr. Pathak submitted that the cause for non submission of the return was the same which weighed with one AAC and was treated as reasonable cause, while according to another AAC, it was not. He submitted that in these circumstances, there was an error of law apparent on the face of record committed by the appellate officer. In view of the order passed by AAC, the petitioner approached CIT, Baroda, by filing revision application under S. 264 of the Act. Mr. Pathak invited our attention to the reasons recorded by revisional authority and particularly para 6 of the order wherein it was observed that in the opinion of the revisional authority, the orders passed by the AAC (in 29 matters referred to hereinabove) were not based on correct appreciation of relevant facts. He further observed that though no further appeals were filed against these orders non filing of appeals did not mean that the orders were acceptable in principle. The revisional authority, therefore, took the view that no reasonable cause was made out for non filing of returns within the period prescribed by law and hence AAC could not avoid penal consequences both for delay in filing returns and payment of penalty (sic). Revision application, therefore, came to be dismissed. Mr. Pathak, submitted that when other appeals were allowed by AAC and no further proceedings were taken by the Department, the orders became final and penalty imposed on them was set aside. In similar circumstances and for similar reasons the appeals of the present petitioners which were required to be allowed were dismissed and revision applications were also dismissed. This is clearly improper and illegal and the petitions should be allowed. Mr. B.J. Shelat for the Department submitted that when findings of fact have been recorded by three authorities, in exercise of power under Art. 226 and/or 227 of the Constitution of India this Court cannot come to a different conclusion. He further submitted that alternative remedy was available to the petitioners by invoking provisions of S. 246 of the Act by filing an appeal to the CIT, but the said remedy has not been availed of. By ignoring statutory provisions, the petitioners have directly approached the CIT by filing revision application under S. 264 of the Act. When revision applications were dismissed, it cannot be said that the CIT has committed an error of law which requires to be corrected by this Court. Finally, it was submitted by Mr. Shelat, that even if this Court is of the opinion that the order passed by ITO as well as by AAC were contrary to law they may be set aside but instead of granting relief to the petitioners, they may be directed to apply to CIT by filing application for waiver under S. 273(1) of the Act.