V.P. Tyagi, J. - (1.) This is an application filed by the Commissioner of Income Tax, Rajasthan. Jaipur under Sec. 256(2) of the Income tax Act, 1961, hereinafter called 'the Act', praying that the Tribunal may be directed to refer the following question: - - "Whether on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty levied under Sec. 271(1) of the I.T. Act, 1961"
(2.) The facts giving rise to this matter are as follows : M/s. Madira Kriya Vikriya Sangh, Kota in the ordinary course should have filed its returns with the Income -tax Officer by 31st December, 1966 to which date the extension was allowed by the Income -tax Officer, but instead of doing so the returns were filed on 5th June, 1967 The Income -tax Officer commenced proceeding under Sec. 271(1)(a) of the Act (sic) penalty for the late filing of the returns. Vide its order dated 17th March, 1971 the Income -tax Officer imposed a penalty of Rs. 13,408/ - which amount according to him was equal to 2% per month of payable demand for 5 completed months. An appeal was filed before the Appellate Assistant Commissioner by the assessee and an a affidavit purporting to have been sworn by Munim Chand Mal Jain was also filed showing a reasonable cause why the returns were filed late Appellate Assistant Commissioner rejected the appeal of the assessee. A second appeal was preferred before the Income -tax Appellate Tribunal, Jaipur. The Appellate Tribunal observed that no doubt the Munim failed to file the perception of the doctor along with his affidavit but the explanation given by the assesses explaining the delay in filing the returns, does not appear to him absurd on the face of it and, therefore, it could not be rejected by the Income -tax Officer. While setting aside the penalty the Tribunal expressed itself in the following words: - - "The explanation given by the assessee seems to be quite reasonable. After rejecting the explanation of the assessee, on behalf of the department, nothing has been brought on record to show that the assessee without any reasonable cause failed to furnish the return in time. According to the ratio of the decisions in the case of Dawn & Co. vs. CIT ( : 87 ITR 71) and P.V. Devassy vs. C.I.T. ( : 84 ITR 502), it was the duty of the department to establish that the assessee his without any reasonable cause failed to furnish the return in time. In the case before us the department failed to do so. In the absence of such material on record, the finding of the Appellate Assistant Commissioner could hardly be sustained."
(3.) The department having felt aggrieved by the said order of the Tribunal made an application before the Tribunal under Sec. 253(1) of the Act to refer the above referred question to the High Court. The Tribunal after hearing the parties and considering the material on the record observed that there was reasonable cause which prevented the assessee from filing the returns in rime and this being essentially a finding of fact, the question could not be referred under the provisions of Sec. 256(1) of the Act. The Department in these circumstances has filed this application under Sec. 256(2) of the Act. 3. The question argued before us by the learned counsel for the Revenue is that the affidavit filed by Munim Chandmal Jain was not verified by the Notary Public which was the proper authority to do so and as it was verified by the Oath Commissioner who had no jurisdiction to verify the affidavits to be filed before the Income -tax authorities and the affidavit was not admissible in evidence and this being a question of law that the order of the Tribunal is bated on an inadmissible evidence the matter should have been referred to this Court. It was also urged that since the Tribunal has accepted certain facts mentioned in the inadmissible affidavit, the order of the Tribunal is vitiated. In support of this argument reliance has been placed by the learned counsel on Dhirajlal Girdharilal vs. Commissioner of Income -tax, : (1954) 26 ITR 736 Bombay and on certain observations in Palkhiwala's Income -tax Act Vol. I page 1007.;