KASHIRAM SARAF SARAF MOTOR COMPANY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AFTER disposal of the ITA. No. 47 (Gau) of 1971 -72, the Tribunal, Gauhati, has made this reference under S. 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee to answer a question of law said to have arisen out of its order passed in the said appeal. The question is as below : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty under S. 271(1)(a) of the IT Act, 1961, can be imposed in spite of the filing of the return within the time allowed under S. 139(4) of the IT Act, 1961, taking into consideration the decision of the Supreme Court in the case of CIT vs. Kulu Valley Transport Co. P. Ltd. (1970) 77 ITR 518 -

(2.) THE assessee is a partner in a firm known as M/s Saraf Motor Company. He filed his IT return relating to the asst. year 1962 - 63, on April 20, 1965. The return should have been filed in June, 1962. Even after issue of notice under S. 139(2) of the Act, he went on defaulting and so the ITO initiated a penalty proceeding under S. 271(1)(a) of the Act. In the penalty proceeding the assessee pleaded before the ITO that the return could not be filed as the share income from the firm in which the assessee was a partner was not received in time. The ITO rejected this plea and held that there was no reasonable cause for the delay in filing the return and more so when he did not care to apply for extension of time. In this view of the case, the ITO imposed a penalty of Rs. 14,996, which was 50per cent of the tax demanded of the assessee under S. 271(1)(a) of the Act.

(3.) THE assessee appealed before the AAC against the penalty order. As it appears from the order of the AAC, the learned counsel for the assessee pleaded only for reduction of the quantum of penalty and no other point was urged. The AAC by his order dated November 8, 1971, passed in the appeal directed the ITO to reduce the quantum of penalty proportionately, as the assessee was given some relief in respect of the assessment made for the relevant year.