BHAGIRATH PRASAD BILGAIYA Vs. COMMISSIONER OF INCOME TAX
LAWS(MPH)-1980-4-23
HIGH COURT OF MADHYA PRADESH
Decided on April 07,1980

BHAGIRATH PRASAD BILGAIYA Appellant
VERSUS
COMMISSIONER OF INCOME-TAX Respondents


Referred Judgements :-

HINDUSTAN STEEL LIMITED VS. STATE OF ORISSA [REFERRED TO]



Cited Judgements :-

INDRAJIT SINGH VS. COMMISSIONER OF INCOME TAX [LAWS(MPH)-1996-3-59] [REFERRED TO]


JUDGEMENT

K.K. Dube, J. - (1.)THE following question has been referred to us for our opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal was, in law, justified in imposing a penalty under Section 271(1)(a) of the I.T. Act, 1961, on the assessee for the late filing of the return as alleged ?"

(2.)THE assessee, Bhagirath Prasad, for the assessment year 1960-61 filed his return of income on July 23, 1964, which was, in fact, due to be filed on or before July 30, 1960. THE return was obviously late by more than 25 months. THE ITO issued a notice to the assessee to show cause why penalty should not be imposed for the late filing of return. THE assessee contened that since his income during the year was only Rs. 950, he was not bound to file a return. THE ITO assessed the total income at Rs. 41,431 and, thereafter, imposed a penalty of Rs. 6,313. THE assessee went up in appeal before the AAC against the order imposing penalty. THE appeal had been dismissed with some modification. THE assessee then preferred a second appeal before the Tribunal. THE Tribunal, maintaining the order, observed that the assessee's return was late by more than 25 months and as the maximum penalty imposable under Section 271(1)(a) was 50 per cent. of the tax levied or to be levied, the penalty imposed was clearly justified.
In Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, the Supreme Court laid down the law that whether penalty should be imposed for a failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In the instant case, the assessee had been taxed on an income accruing from a sale of land. The assessee was under a bona fide belief that it was an accretion to the capital and that such an income was not liable to be taxed.

The excess of the money received by profit from sale of land is ordinarily taken to be accretion to the capital. The assessee was, therefore, under a bona fide belief that such income is not liable to income-tax. This indeed is a vexed question and it cannot be attributed to the assessee that he had wilfully tried to suppress his income from the sale of land. In eur opinion, the case would be covered by the rule in Hindustan Steel Ltd.'s case [1972] 83 ITR 26 (SC). We are, accordingly, of the opinion that in the facts and circumstances of the case, no penalty was imposable for filing the return belatedly.

(3.)WE answer the question in the negative in favour of the assessee that in the facts and circumstances of the case, the Tribunal was not justified in imposing a penalty under Section 271(1)(a) of the I.T. Act, 1961, on the assessee for filing the return late. There shall be no order as to costs.


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