P GOVINDASWAMY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AS per the directions of this court, the Income-tax Appellate Tribunal has stated a case and referred the following question of law :

(2.) THE short facts that are necessary for the disposal of the tax case are that the assessee has not filed the return of the income within the due date for the assessment year 1980-81. THE due date for filing the return was July 31, 1980. THEreafter, the assessee filed an application for extension of time and even after extension of time granted, the assessee has not filed the return, which resulted in the passing of an ex parte order of assessment dated February 28, 1983, under Section 144 of the Income-tax Act. After the ex parte order of assessment was made, the assessee filed the return on March 28, 1983, declaring a loss of Rs. 79,097. No doubt, the ex parte order was cancelled in appeal by order passed by the Commissioner of Income-tax (Appeals) dated October 5, 1983. But the assessee has not filed any fresh return. THE Income-tax Officer thereafter completed the assessment under Section 143(3) read with Section 250 of the Income-tax Act on March 14, 1986, on the basis of the return filed on March 28, 1983. He also initiated the penalty proceedings for the failure on the part of the assessee to file the return on the due date under Section 271(1)(a) of the Act and proposed to levy a penalty of Rs. 1,98,560. THE assessee was not able to give any reason for not filing the return in time before the Income-tax Officer and hence the Income-tax Officer levied penalty under Section 271(1)(a) of the Act. However, on appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) found that there was some property dispute in the assessee's family and the existence of the property dispute would constitute reasonable cause for the delay in filing the return and granted 12 months further time from the due date for filing the return. However, the Commissioner of Income-tax (Appeals) upheld the levy of penalty from July 31, 1982. THE assessee took the matter in appeal before the Income-tax Appellate Tribunal. THE Income-tax Appellate Tribunal held that the failure of the assessee to file the return is also a ground to levy penalty under Section 271(1)(a) of the Act. THE Tribunal rejected all the contentions raised by the assessee and held that the assessee had no reasonable cause for not filing the return beyond March 16, 1982. Accordingly, the Income-tax Appellate Tribunal upheld the levy of penalty holding that the assessee had no reasonable cause for the delay in filing the return beyond March 16, 1982, and partly allowed the appeal preferred by the assessee. This order of the Tribunal is the subject matter of the present tax case reference.