Punjab-Haryana High Court
Commissioner Of Income-Tax vs Surinder Kumar Parmod Kumar And Others. on 28 August, 1991
Equivalent citations: (1992)100CTR(P&H)279, [1992]193ITR71(P&H), [1992]60TAXMAN284(PUNJ, HAR)
JUDGMENT
ASHOK BHAN J. - The Income-tax Appellate Tribunal, Amritsar, has referred to this court the following four questions of law its opinion :
"1. Whether, on the facts and the circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the applications made after the expiry of the due dates are valid in law and that the Incometac Officer is bound to consider them ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that if no rejection is communicated to the assessee, he is justified in presuming that the extension applications having been made were duly granted by the Income-tax Officer ?
3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law of holding that the asses see is not required to incorporate all the reasonable causes in the explanation submitted by him to the Income-tax Officer and that whether the Income-tax Appellate Tribunal is justified in considering a cause not so incorporated in the explanation ?
4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the assessee was not in default right from June 10, 1971, when the return was due to the date the return filed ?"
The facts briefly stated are as under :
For the assessment year 1971-72, the Department, on May 4, 1971, issued notice under section 139(2) of the Income-tax Act (hereinafter referred to as "the act"), asking the assessee to furnish the return within 30 days of the receipt of the notice. Notice under section 139(2) of the Act was served on May 11, 1971 and the return was due to be filed by the assessee on or before June 10, 1971. The assessee filed the return on February 13, 1974. As there was delay in the filing of the return, the Income-tax Officer initiated penalty proceedings under section 271(1)(a) of the Act for default in the late filing of the return by 32 months. The assessee filed his reply to the show-cause notice. The Income-tax Officer not being satisfied with the explanation of the assessee found that the assessee was not prevented by reasonable cause from filing the return in time and she, therefore, imposed a penalty of Rs. 3,27,715 for late filing of the return by 32 months. The Appellate Assistant Commissioner, in appeal, reversed the order of the Income-tax Officer. The Appellate Assistant Commissioner found that the assessee was prevented by reasonable cause for not having filed return up to February 13, 1974, and as such the entire penalty was ordered to be cancelled. Being aggrieved, the Revenue Filed an appeal before the Tribunal. The Tribunal upheld the order of the Appellate Assistance Commissioner and dismissed the appeal filed by the Revenue. At the instance of Revenue, four questions of law reproduced in the earlier part of this judgment have been referred to this court for its opinion.
Another fact which may be adverted to at this stage is that the assessee sought extension of time for filing of return by filing application dated September 27, 1971, March 28, 1972, September 19, 1972, April 28, 1973, and September 30, 1973 up to December 30, 1971, June 30, 1972, October 31, 1972, September 30, 1973, and November 15, 1973, respectively. The extension applications were made by the assessee much after the expiry of the due date and after the expiry of the dates for which extensions were sought by the assessee under various applications. The connection raised before the Tribunal was that the assessee has filed applications for extension of time repeatedly which were made much after the expiry of the due date and after the expiry of the dates for which extension was sought and, therefore, such applications did not deserve any consideration. As against this, the contention of the assessee was that he had made a umber of applications for extension for filing the income-tax return but no order either accepting or rejecting the applications for filing the return was ever conveyed to the assessee and, therefore, the assessee remained under the belief that the extension applications having been made had been duly granted by the Income-tax Officer. The question before the Tribunal was as to whether the extension applications given by the Income-tax Officer and whether the assessee was justified for having presumed that the extension applications made thereby were duly granted in the absence of any order to the contrary communicated to the assessee. Learned Tribunal relied upon two judgments of this court in Addl. CIT v. Roshan Lal Kuthiala (Deceased) [1975] 100 ITR 329 and Karam Singh v. CIT [1977] 110 ITR 726, wherein it has been held that applications could be made even after the expiry of the prescribed period and the Income-tax Officer was under an obligation in law either to grant or reject the application for extension of time for filing the return and further that such an order, if passed, should be conveyed to the assessee by the Income-tax Officer, the assessee could be taken to be under a reasonable belief that his request had been acceded to and therefore, there was no delay in filing the return.
We have considered the arguments advanced by learned counsel appearing for the Department. Question No. 1 is squarely covered by the judgment of this court in Karam Singhs case [1977] 110 ITR 726, wherein it has been held as under (headnote) :
"From the application form prescribed for asking for extension of time for filing of the return of income, it is clear that the application can be made even after the expiry of the prescribed date. Moreover, the proviso to section 139 (2) of the Income-tax Act, 1961, does not contain any limitation to the effect that such an application must be made before the due date."
Following the view taken by this court in Karam Singhs case [1977] 110 ITR 726, question No. 1 is answered in the affirmative, i.e., in favour of the assessee and against the Revenue and it is hold that an application for extension of time filed beyond the due date is valid in law and that the Income-tax Officer was bound to consider them.
Question No. 2The facts giving rise to this question have been enumerated in the earlier paragraphs of this judgment. It has been held in Karam Singh v. CIT [1977] 110 ITR 726 (P&H), Harmanjit Trust v. CIT [1984] 148 ITR 214 (P&H) and Addl. CIT v. Roshan Lal Kuthiala [1975] 100 ITR 329 (P&H) that a duty is enjoyed upon the Income-tax Officer to intimate the assessee as to whether its request for extension of time for furnishing the return had been granted or refused. If no communication is addressed either accepting or rejecting the application within a reasonable time by the Income-tax Officer, then the assessee is justified in presuming that the extension application filed by him were duly granted by the Income-tax Officer. Mr. A. K. Mittal, learned counsel appearing for the Revenue, has challenged the correctness of the view taken by this court and for that proposition relied upon the following three judgments :
Venkata Krishnaiah (T.) and Co. v. CIT [1974] 93 ITR 297 (AP), Assam Frontier Veneer and Saw Mills v. CIT [1976] 104 ITR 479 (Gauhati) and CIT v. S. P. Viz. Construction Co. [1987] 165 ITR 732 (Pat).
The later two judgments have relied upon the reasoning given by the Andhra Pradesh High Court in T. Venkata Krishnaiahs case [1974] 93 ITR 297 (AP). This court, in Harmanjit Trusts case [1984] 148 ITR 214 has specifically disagreed with the view taken by their Lordships of the Andhra Pradesh High Court in T. Venkata Krishnaiahs case [1974] 93 ITR 297. Their Lordships of the Patna High Court in S. P. Viz. construction Co.s case [1987] 165 ITR 732 have not noticed any of the three judgments of this court referred to in the earlier part of this paragraph Incidentally, their Lordships of the Patna High Court in S. P. Viz. Construction Co.s case [1987] 165 ITR 732 have not taken notice of a judgment of their own court in CIT v. Ramdas and Sons [1980] 123 ITR 889 where the said High Court had taken the view that, when an application for extension of time was not replied to by the Income-tax Officer, the assessee could presume that his request for extension of time had been granted and thus the assessee had reasonable cause for not failing the return by the due date. This court, in Harmanjit Trusts case [1984] 148 ITR 214, relied upon the view taken by the Patna High Court in Ramdas and Sons case [1980] 123 ITR 889.
We have considered the matter afresh at length and we are in respectful agreement with the view taken by this court in the pronouncement of this court referred to above. In Harmanjit Trusts case [1984] 148 ITR 214, this court has specifically disagreed with the view taken by the Andhra Pradesh High Court in T. Venkata Krishnaiahs case [1974] 93 ITR 297. We quote the following observations of this court in Harmanjit Trusts case [1984] 148 ITR 214 as having correctly enunciated the law on the point (at p. 218) :
"Duty was cast on the Income-tax Officer to intimate to the assessee whether its request for extension of time for furnishing the return had been granted or refused. Thus, the predominant view in various High Courts is that the assessee can well presume that his request for extension of time for furnishing the return had been granted, unless the Income-tax Officer well in time communicates to the assessee his refusal. And it is precisely for this reason that Form I. T. N. S. (Annexure F with the statement) has been provided for use of the Income-tax Officer to convey grant of refusal of extension of time. The lone voice of the Andhra Pradesh High Court in T. Venkata Krishnaiah and Co. v. CIT [1974] 93 ITR 297, holding the contrary view that the Income-tax Officer was not bound under the provision of any Act or the rules made thereunder to pass any order on the application for extension of time, received after the expiry of the date given in the notice under sub-section (2) of section 139, to our mind, with due the predominant and appropriate view taken by the majority of the High Court and especially by this court. The aforesaid view of the Andhra Pradesh High Court alone was the axis on which the appellate decision of the Tribunal revolved, and to our view not rightly."
For the foregoing reasons, question No. 2 is answered in the affirmative, i.e., in favour of the assessee and against the Revenue and it is held that since the application filed by the assessee remained unreplied to by the Income-tax Officer, the assessee was justified in presuming that extension applications having been made were duly granted by the Income-tax Officer.
Question No. 3 :
The assessee had filed the extension application stating therein several grounds in support of the reasonable cause for delayed filing of the returns. The assessee did not raise the plea in either of these applications that he was under a bona fide belief that since no reply to the extension applications had been conveyed, it was presumed by him that the applications had been conveyed, it was presumed by him that the applications filed for extension for filing of return stood sanctioned by the Income-tax Officer. An argument was raised by plea regarding such belief, it was not open to the Tribunal to entertain this ground as it had not been taken as one of the grounds in reply to the show-cause notice and, therefore, the same did not exist at all. the Tribunal repelled this argument and held that such a plea could be taken by the assessee at the appellate stage as well. It was argued that the Tribunal erred in taking the view to this effect. It is not necessary for the assessee to state all the matters in its explanation and the absence of one or more causes in its explanation would not mean that such cause did not exist at all. The assessee may be prevented from filing the return by several causes and it is not necessary for the assessee to state all the causes in its explanation. The absence of one or more causes in the explanation would not mean that such cause did not exist at all. It cannot be inferred that since no communication rejecting the application for extension had been received, the same stood granted, this ground did not exist at all or in any case that such a cause could not be taken into consideration by the Tribunal specially in view of the law laid down by this court in Karam Singhs case [1977] 110 ITR 726 and Roshan Lal Kuthialas case [1975] 100 ITR 329 (P&H). Question No. 3 is accordingly answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
Question No. 4 :
Question No. 4 is essentially a question of fact. In any case, in view of what has been held on questions Nos. 1, 2 and 3, this question does not arrive for adjudication.
No order as to costs.