SEWBALAKRAM AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under S. 256(1) of the IT Act, 1961, the Tribunal, Gauhati Bench, has referred the following question of law :

(2.) AS the case is stated, the assessee is a registered firm with its place of business at Kohima, Nagaland. The assessment year is 1962 -63. A notice under S. 139(2) was issued on December 12, 1962, requiring the assessee to file a return within 30 days, but no return was filed and a notice under S. 274 r/w S. 271 (1)(a) was issued on February 8, 1963, asking the assessee to show cause as to why penalty should not be imposed for not complying with the notice at this stage. A return was filed by the assessee on April 15, 1964. Further opportunities were given to the assessee to comply with the notice issued under S. 271(1)(a)/274. Hearing was fixed on January 29, 1965, June 8, 1965, and August 30, 1965, and the final hearing was on January 31, 1967, where a written reply was given by the assessee raising three -fold contention before the ITO :

(3.) WHEN the matter came up before the Tribunal the assessee once again raised the aforesaid three contentions. As regards reasonable cause, the Tribunal found that the reasons advanced could not have prevented the assessee for the whole of 15 months. Observing that the cause shown should be such as should have a direct bearing on the inability pleaded and should not be merely a vague suggestion in a general way, it held that the ITO had been able to show that the assessee had shown conscious disregard of his legal obligation of filing a return it also held that the levy of interest under S. 139 was no bar to the levy of penalty under S. 271(1)(a) ; that only in a case where the ITO extended the time for filing the return and the return was filed within the time so extended that the penalty could not be levied; and that interest under S. 139 had to be charged in accordance with the provisions of the section ; and even in a case where a return was filed under S. 139(4) interest became chargeable. The Tribunal accordingly upheld the penalty. Wherefore the above question of law in this reference.