COMMISSIONER OF INCOME TAX Vs. SAVE D V

JUDGEMENT

(1.) THIS is a reference at the instance of the CIT under S. 256(1) of the IT Act, 1961, and the following question of law stands referred to us :

(2.) A few facts may be stated. The assessee before us is a partnership firm and we are concerned with the asst. yrs. 1963 64 and 1964 65. The relevant accounting periods for these assessment years were the years ending September 30, 1962, and September 30, 1963, respectively. Accordingly, returns of income for the above years were due on June 30, 1963, and June 30, 1964, respectively. It appears that the assessee firm had applied for extension of time for filing the returns but no orders were passed by the ITO on the application. Ultimately, notices under S. 139 (2) were issued and served on the assessee. For the first year, i.e., 1963 64, the notice was served on December 3, 1963, and for the second of the years under consideration, i.e., 1964 65, the notice was served on March 30, 1965. As per the notices necessary returns were required to be filed by the assessee within 35 days of the service of the respective notices. However, the assessee filed returns not within this period but on May 4,1965, and on April 19,1966, respectively, for the two assessment years.

(3.) THE assessee thereafter moved the Tribunal. Several different contentions were raised before the Tribunal. It was, inter alia, submitted that the main partner, Shri D. V. Save, had died on January 10, 1961, and that by reason of such death the other partners were so much mentally perturbed not only during the period of his illness but even subsequently, that accounts of the firm could not be made up in time so as to enable the partners to file the returns in question. In other words, it was pleaded that the assessee had a reasonable cause for the late filing of the returns. Further, it was submitted that inasmuch as the notice under S. 139(2) had been issued by the ITO and in pursuance thereof the assessee had filed the returns (although not within the time mentioned in the notices), it was not open to the ITO to levy penalty on the basis of an alleged default or transgression of S. 139(1). In connection with this submission a decision of the Delhi Bench of the Tribunal was relied upon. The Tribunal considered a number of hypothetical cases and came to the conclusion that in the instant case the penalty levied by the ITO on the basis of the transgression of S. 139(1) was not justified. In the circumstances, it held that S. 271(1)(a) did not cover a case of a default of present nature and orders imposing penalties were not legally tenable. In that view, it allowed the appeal expressing clearly in para. 4 of its order that in the view it had taken there was no necessity of dealing with the other arguments advanced on behalf of the assessee.