KALAKRITHI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) COUNSEL contends that the power of the Commissioner must be exercised either wholly in favour of the assessee, or wholly against him when a relief sought by the assessee under section 273B of the Income Tax Act, 1961, is in respect of a penalty levied under section 272A, sub-section (2), clause (c) of the Act.

(2.) UNDER section 272A of the Act, a person, who, inter alia, fails to furnish the returns or statements mentioned in that section will be liable to pay by way of penalty at a rate of, as that section stood in the year 1990, a sum of not less than Rs. 100 and not more than Rs. 200 for every day during which the failure continued.

(3.) THE words "reasonable cause" in the section must necessarily have a relation to the failure on the part of the assessee to comply with the requirement of the law which he had failed to comply with. In case of delay in compliance, the cause shown must be for the whole of the period of the delay and not merely for a part thereof. If the cause shown is such as to explain the delay as a whole and constitutes' a good reason for the non-compliance, no penalty would be leviable. However, in cases where the cause shown is such as to explain a part of the delay, or the cause shown is only to. mitigate the gravity of the non-compliance, such a cause cannot be extrapolated and treated as being a good cause for the whole of the period of the delay in its entirety. All or nothing the proposition canvassed by the petitioner would be detrimental to assessees themselves if the choice placed before the Commissioner in all cases were to be that he should set aside all penalties the moment he finds that there is a cause, though not fully satisfactory but which may be accepted in part which may justify a grant of a partial relief. If the Commissioner were to be compelled to grant relief in whole even where the cause shown is not such as to explain in full the delay or the gravity of the non-compliance, the Commissioner would be compelled to reject and deny all relief. A construction which would preserve the exercise of the power in favour of the assessee in circumstances which warrant it is to be preferred to a construction. which would result in the likelihood of denial of relief.