Gujarat High Court
Commissioner Of Income-Tax vs J.L. Trivedi And Sons on 26 March, 1993
Equivalent citations: [1994]210ITR112(GUJ)
JUDGMENT G.T. Nanavati, J.
1. This application is filed by the Commissioner of Income-tax under section 256(2) of the Income-tax Act, as the Tribunal rejected the application made under section 256(1) for referring the question which, according to the Commissioner of Income-tax, arose out of the Tribunal's order.
2. J. L. Trivedi and Sons is the assessee. It is a registered firm. It came into existence in or about 1970-71. It consisted of three partners, viz., Jashwantlal Kantilal Trivedi, Shantaben Jayantilal Trivedi and Naisedh Jayantilal Trivedi. The share of Shantaben, the mother was 45 per cent., Naisedh had 50 per cent. share and the share of Jashwantlal was 5 per cent. and he was admittedly an outsider in the sense that he did not belong to the family of Jayantilal Trivedi. The affairs of the firm were controlled and managed by Shantaben and Naisedh and Jashwantlal was working under their control and guidance. In the year 1971-72, Pallavika, daughter of Shantaben, eloped with Chandrakant Shankerlal Rana and could be traced and brought back to the family with great efforts and pain. She was then married to Bharatkumar Ratilal Pandya in December, 1972. But her relations with Bharatkumar were never cordial and again in January, 1981, she eloped with Chandrakant Shankerlal Rana. She was brought back in July, 1981, and finally her relationship with her husband got terminated in February, 1982, by a decree of divorce. All these reasons were put forward by the assessee while explaining the delay in filing the Income-tax returns for that period. However, we are not concerned now with the returns filed for the assessment years 1971-72 to 1976-77. In this application, we are concerned with the assessment year 1977-78. The due date for filing the Income-tax returns was June 30, 1977, but it was actually filed on February 17, 1982. The Income-tax Officer did not consider the reasons put forward by the assessee as reasonable and sufficient cause for filing the return late by 55 months. He therefore, imposed penalty for that period. Aggrieved by that order, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax did not accept the explanation given by the assessee as reasonable and sufficient but considering the fact that the assessee had asked for extension up to December 31, 1977, and that it was granted, held that the delay was not of 55 months but of 36 months. Aggrieved by that order, the assessee preferred an appeal to the Tribunal. The Tribunal was of the view elopement of Pallavika must have effected the calm and peace of her brother and the mother who were partners of the assessee-firm, but the said effect appears to have vanished by December 31, 1975. The Tribunal after taking note of the fact that the return for the assessment year 1976-77 was filed on February 12, 1980, though it was due on June 30, 1976, and that there was no reason for condoning the delay in filing the return for that year after January 1, 1977, and that for the period of 37 months, appropriate penalty was imposed upon the assessee, observed as under as regards the delay in filing the return for the assessment year 1977-78 :
"Before we proceed to appreciate the merits of the assessee's case we would like to point out another material factor which we indicated in court in the course of hearing these appeals and which has been consistently followed by the Benches of the Tribunal at Ahmedabad. That factor is with regard to the overlapping period of delay in the filing of returns for two or more than two years. The Tribunal is of the view that under the Act being of quasi-criminal character are a specie, that a person cannot be punished twice for the commission of the same offence or default in the nature of an offence. This doctrine is enshrined in article 20 of the Constitution of India and is embodied in section 403 of the Code of Criminal Procedure, 1973. Following that doctrine, the Tribunal has consistently taken the view in a number of cases relating to imposition of penalty that for the same period of default committed in filing the returns which may be relevant to two or more than two assessment years and which no doubt is a continuing offence, should be punished only once and not twice or thrice, as the case may be. In this behalf, the opinion of the Tribunal has been that in the cases of firms maintaining accounts, filing of returns generally depends upon the completion of accounts. If accounts for a particular year were not completed or finalised or finalised and for that reason the return generally depends upon the completion of accounts. If accounts for a particular year were not completed or finalised and for that reason the return of income for that year could not be filed, the return for the subsequent year could not be expected to have been filed. Therefore, if the delay committed in filing the return of the earlier year is condoned or punished, the same delay should not be punished in the subsequent year. Since the benefit of condonation of delay or to speak in other words of 'autrefois acquit' in the earlier year would be available in the subsequent year the benefit the rule of double jeopardy should equally be available to the assessee in the subsequent year/s."
3. Appreciating the facts on the basis of the material before it and following the principle quoted above, the Tribunal held that :
"... delay up to February 12, 1980, has been punished in the case for the assessment year 1976-77 and delay from January 1, 1981, to January 31, 1982, has been held by us as having been satisfactorily explained. That leaves the unexplained delay for the period from March 1, 1980 to December 31, 1980, i.e., for 10 months. Penalty for 10 months is thus imposable for this year.
Thus, the appeal filed by the assessee was partly allowed and the penalty for ten months, i.e., from March 1, 1980, to December 31, 1980, was confirmed. The Tribunal cancelled the penalty for the rest of the period. The Commissioner of Income-tax feeling aggrieved by that order applied to the Tribunal under section 256(1) to refer the following question to this court."
"Whether the Appellate Tribunal is right in law and on facts in confirming penalty for ten months only and cancelling the penalty levied for the rest of the period as calculated by the Income-tax Officer?"
4. The Tribunal rejected that application holding that the entire delay in filing the return was satisfactorily explained and that whether there was any reasonable cause for delay or not was essentially a question of fact and since it has decided the question on appreciation of the material on record, no referable question of law arose out of its order.
5. What is urged by learned counsel for the Revenue is that the Tribunal misdirected itself in law when it held that "if the delay committed in filing the return of earlier year is condoned or punished, the same delay should not be punished in the subsequent year". He submitted that neither the doctrine of double jeopardy contained in article 20 of the Constitution of India nor section 403 of the Code of Criminal Procedure, 1973, can have any application to assessment proceedings. He also submitted that not filing the Income-tax return for each year in time is a separate default by itself and merely because such default can be regarded as a continuing default in the sense that it can be punished till it continues, for that reason, a series of defaults cannot be regarded as one default only and that the assessee should be punished for each default even though the period of default may overlap.
6. In our opinion, there is much substance in this contention raised on behalf of the Revenue. Article 20(2) can be invoked if the following conditions are satisfied :
1. There must be a previous prosecution.
2. The accused must have been punished at such prosecution.
3. The subsequent prosecution must also be one for the prosecution and punishment of the accused.
4. The prosecution on both the actions must be in relation to the same offence.
7. The default made punishable by section 271(1)(a) cannot be equated with an offence can nor the proceedings contemplated by that section be regarded as prosecution for an offence. Though section 271 provides for payment of fine, by way of penalty, it is really in the nature of civil liability and not punishment for an offence. Moreover, when a default, which is a continuing default, is committed and again a similar default is committed thereafter, it will not be proper to invoke the principle of double jeopardy because the subsequent default committed subsequently. The Tribunal was, therefore, obviously wrong in invoking the doctrine enshrined in article 20 of the Constitution in this case and cancelling the penalty for the period which was overlapping.
8. It was next submitted that the Tribunal was also wrong in proceeding on the basis that if the accounts of the firm are not completed in a particular year and for that reason, the return of income for the subsequent year's return has to be condoned. It is no doubt true that non-completion of the accounts of the earlier year cannot by itself be regarded as a good ground for delay in filing the return of income for the subsequent year. The reason is that non-completion of accounts for the earlier year may be because of a cause which may not be reasonable or sufficient. Non-completion of accounts for the earlier year may be because of a cause which may not be reasonable or sufficient. Non-completion of accounts for the earlier year may be intentional or because of negligence of the assessee. Obviously, such an excuse will not be regarded as a reasonable cause for delay in filing the Income-tax return for that year; and if such excuse cannot be regarded as sufficient ground for that year, ordinarily, that would not be regarded as good ground for late filing of the return for the subsequent year. Just as the question whether non-completion of accounts can be a reasonable cause will have to be decided by reference to the facts of each case, similarly whether the delay in filing the return of income for the subsequent year because of delay in the completion of accounts of the earlier year can amount to reasonable cause or not will have to be decided by reference to the facts of each case. The principle enunciated by the Tribunal in so far as it is stated in wider terms than we have indicated above will have to be regarded as erroneous.
9. So far as the facts of this case are concerned, as stated above, the return was due on June 30, 1977. The assessee, however, applied for extension of time up to December 31, 1977. The return was actually filed on February 17, 1982. Considering the explanation given by the assessee and the fact that the Income-tax return for the assessment year 1976-77 could be filed only on February 12, 1980, the Tribunal held that the accounts not having been completed for the previous year, the assessee could not have filed the return for the assessment year 1977-78 till that date. Therefore, the delay in filing the return will have to be counted from March 1, 1980. The Tribunal further held that in view of the tragic event of elopment once again, there was reasonable cause for not filing the return between January 1, 1981, and January 31, 1982. As the return was filed on February 17, 1982, the only period that had remained unexplained was the period from March 1, 1980 to December 31, 1980. It is no doubt true that, as contended by learned counsel for the Revenue, no clear finding has been recorded by the Tribunal to the effect that the assessee could not file its return for the assessment year 1977-78 till February 12, 1980, because the accounts for that year were not completed till February 12, 1980. But the Tribunal, while rejecting the application filed by the Revenue under section 256(1), has indicated that the assessee was not able to file the return till February 12, 1980, because the accounts of the earlier year were not finalised. The following observations of the Tribunal in this behalf indicate what prompted it to hold that there was no delay till March 1, 1980 :
"The Tribunal found that as far as the assessment year 1977-78 was concerned, the Commissioner of Income-tax (Appeals) had condoned the delay up to December 31, 1977, but the assessee had already been penalised for delay up to February 12, 1980, because for the assessment year 1976-77, the penalty has been fully confirmed. According to the Tribunal, the accounts of the subsequent years could not have been finalised unless the accounts of the earlier years were finalised."
10. Thus, for holding that there was sufficient cause prior to March 1, 1980, the Tribunal relied upon this circumstance and also the circumstance of the overlapping period. On the basis of the material on record, the Tribunal thus appears to have recorded the finding that the accounts for the assessment year 1977-78 were not completed till February 12, 1980. It was in these circumstances that it further recorded a finding that there was reasonable cause for delay till February 12, 1980. Again the finding that there was reasonable cause for the delay for the period from January 1, 1981 to February, 1982, was a finding of fact recorded on the basis of the material on record and the explanation given by the assessee in that behalf. Neither in an application made under section 256(2) nor in a reference made under section 256(1), can this court reappreciate the evidence to consider whether such finding is justified or not unless a specific question was raised to that effect before the Tribunal and has been referred to this court. In this application made under section 256(2), no specific question as regards the propriety of that finding of fact has been raised. Therefore, we will have to accept that finding of fact and proceed on the basis that there was reasonable cause not only for the period from January 1, 1981 to February, 1982, but also for the period beginning from June 30, 1977, to February, 1980.
11. This application is, therefore, rejected. Rule is discharged. No order as to costs.