COMMISSIONER OF INCOME TAX Vs. VIZ S P CONSTRUCTION COMPANY

JUDGEMENT

(1.) THIS is a reference under S. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act"). The questions, referred to us, for our opinion, are as follows :

(2.) IN this reference we are concerned with asst. year 1971 -72. The due date for filing of the return was 30th Sept., 1971. Application for extension of time to file return was filed on 1st Oct., 1971. Although the application shows the date 30th Sept., 1971, but the finding is that it had been filed on 1st Oct., 1971. A return for the relevant assessment year was filed on 31st May, 1972 showing income of Rs. 80,000 by estimate. It appears that it was realised by the assessee himself that the return filed by him was defective for various reasons. A revised return was, therefore, filed on 17th March, 1973 showing total income of Rs. 1,03,470. The return having been filed beyond the due date, a penalty proceeding in term of S. 271(1)(a) was initiated. The ITO held that the return filed on 31st May, 1972 was no return as it lacked necessary particulars. He, therefore, levied penalty for 17 months delay in filing the return. A sum of Rs. 28,626 being 2% of the tax of Rs. 84,194 was imposed. The firm was treated as an unregistered firm. On appeal the AAC considered the plea of the assessee for not filing the return within time. In that behalf he examined the reasonableness for the delay in filing the return. The AAC applied himself to the pleas advanced by the assessee. Upon full consideration he held that no reasonable cause had been shown for late filing of the return. The finding is in the following words :

(3.) THE assessee being aggrieved by the order of the AAC, filed appeal before the Tribunal. The Tribunal also proceeded on the footing that application for extension of time had been filed on 1st Oct., 1971. Nothing has been brought to our notice indicating that the application had been filed earlier. We shall, therefore, also proceed on the basis of the fact that the application for extension of time had been filed on 1st Oct., 1971. The Tribunal, however, considered the question of reasonable cause for late filing of return from an entirely different angle. It observed that the assessee having filed an application for extension of time on 1st Oct., 1971, although beyond time, may have left the assessee under the impression that time had been extended till 31st March, 1972. as prayed by him. The Tribunal was, therefore, of the view that there was reasonable cause uptil 31st March, 1972 for not filing the return. In regard to the delay beyond 31st March, 1972, the plea of the assessee was rejected by the Tribunal as well. The Tribunal, therefore, modified the order of penalty. Since the first return had been filed on 31st May, 1972, the penalty would be leviable for April and May, 1972. The Tribunal also held that the first return filed on 31st May, 1972 could not be ignored and, therefore, penalty for two months only could be levied.