COMMISSIONER OF INCOME-TAX Vs. INAMULLAH

JUDGEMENT

(1.) Under Section 256(2) of the Income-tax Act, 1961, the Tribunal has stated the following question :

(2.) The assessee is a firm. It was constituted on April 1, 1968. For the assessment year 1969-70, which was the first assessment year for it, it did not file the return on or before September 30, 1969, the prescribed date. It filed the return on October 27, 1970, i.e., with a delay of more than twelve months. On account of this delay, a notice under Section 271(1)(a) of the Act was issued to him. The assessee, in his explanation, merely relied upon the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. Pvt. Ltd. [1970] 77 ITR 518. He submitted that the return filed by it should be treated as one under Section 139(4), that it was a valid return and was so treated and acted upon by the Income-tax Officer and hence no penalty is leviable. He did not indicate any reasons for the delay in submission of the return. In the circumstances, the Income-tax Officer levied a penalty which was confirmed in appeal. The Tribunal, on further appeal, set aside the penalty on a reasoning which appears to us to be not in accordance with law. This is all what they said in para 4 :

(3.) The question is not whether the assessee wished to evade tax but the question is whether he furnished any explanation for the delay in filing of the return. Merely because a return was filed and entertained under subsection (4) of Section 139, it does not relieve him or exonerate him from the liability to pay penalty under Section 271(1)(a) or of his obligation under Section 139(1). What is relevant is that he submitted no explanation except that he filed the return under Section 139(4) and no penalty was leviable. The Tribunal erred in deleting the penalty. It may be that it was the first year of the business of the assessee. It may also be that the return filed by him had been accepted but those facts may be relevant on the question of quantum, if any, but in the absence of any explanation whatsoever, the Tribunal was in error in setting aside the penalty. For the above reasons, the question referred is answered in the negative, i.e., in favour of the Revenue and against the assessee. No costs.