COMMISSIONER OF INCOME TAX Vs. MUKANDDAS VISHNUKUMAR

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Delhi Bench "B", by its order dated March 21, 1969, has referred under Section 256(1) of the Income-tax Act, 1961, the following question for answer, namely:

(2.) THE circumstances, which it is necessary to notice for the disposal of this reference, briefly stated are these: Gokuldas Pradeepkumar and Mukanddas Vishnukumar, the two Hindu undivided families, came into existence as a result of partial partition of the bigger Hindu undivided family of Seth Thakurdas Khivraj. THE business of Seth Thakurdas Khivraj was taken over by a partnership firm of M/s. Thakurdas Khivraj. THE first assessment in the hands of the two undivided Hindu families after partial partition was to be made for the assessment year 1959-60. THE two assessees had their sources of income from house property, share of profit from the firms of M/s. Khivraj Rathi Ginning and Pressing Factory, Beawar, and M/s. Thakurdas Khivraj, Beawar. THEy also had dividends and speculative business. THEir income exceeded the minimum limit for the purposes of Section 18A(3) of the Indian Income-tax Act, 1922 (hereinafter called " the old Act"), and because the assessees failed to comply with the provisions of the said section and did not submit the estimate of advance tax payable by them before March 15, 1959, the Income-tax Officer imposed certain penalties on both the assessees. THE assesses appealed and excepting for the reduction of penalties the appeal was dismissed. THE assesses took up the matter before the Tribunal and challenged the penalties, firstly, on the ground that no penalty could be imposed under Section 273 of the Income-tax Act, 1961 (hereinafter called "the new Act" ), because the assessments related to the years 1959-60 and 1960-61 to which the provisions of the new Act were inapplicable. Secondly, it was urged before the Tribunal that the estimates were filed on March 20, 1959, and March 30, I960, and the default was only for a few days. THE Tribunal, however, found relying on the decisions in SC Magavi, Haveri v. Commissioner of Income-tax, 1967 64 ITR 409, Shakti Offset Works v. Inspecting Assistant Commissioner of Income-tax, 1967 64 ITR 637 and Commissioner of Income-tax v. Hiralal Mohanlal Shah, [1968J 69 ITR 312 (Guj) that the defaults made under Section 18A(3) of the old Act could not be proceeded against under the new Act. THE Tribunal distinguished the case of this court in Indra & Co. v. Union of India, [1967J 64 ITR 664 (Raj) on the ground that the facts of the Rajasthan case were different. THE Tribunal found that there was a delay of 5 days only in respect of the assessment year 1959-60 and there was a reasonable excuse for such delay, but held that so far as the year 1960-61, it could not be said that the assessee had any reasonable cause for the delay in the submission of the return. THE Tribunal accordingly found that the penalties imposed by the Appellate Assistant Commissioner were not legal and, if recovered, should be refunded. THE Commissioner of Income-tax, Jaipur, moved the Tribunal under Section 256(1) in regard to both the assessees and for both years of assessment and the Tribunal has referred the above-mentioned question in a consolidated form for our answer.