Gauhati High Court
Ajit Singh Rais vs Commissioner Of Income-Tax. on 20 June, 1988
Equivalent citations: (1988)72CTR(GAU)214, [1988]174ITR418(GAUHATI)
JUDGMENT
A. RAGHUVIR C.J. - The reference in this case was made under sub-section (1) of section 256 of the Income-tax Act, 1961.
The three questions referred read as follows :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that despite the charge of interest under clause (iii) of the proviso to section 139(1) of the Income-tax Act, 1961, penalty can be validly imposed under section 271(1)(a) of the Income-tax Act, 1961 ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that penalty can be levied under section 271(1)(a) of the Income-tax Act, 1961, in spite of the filing of the return within the time allowed under section 139(4) of the Income-tax Act, 1961 ?
(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the delay by the assessee in filing the returns for the assessment years 1963-64 to 1967-68 was without any reasonable cause and so the Appellate Assistant Commissioner was not justified in condoning any part of the delay in the filing of the returns for those years and in reducing the amount of penalties levied by the Income-tax Officer ?"
S. Ajit Singh is the assessee. The Income-tax Officer, in his case, imposed penalty under clause (a) (i) of section 271(1) of the Income-tax Act, 1961. On appeal, the Appellate Assistant Commissioner condoned the delay and recomputed the penalties on the basis of the unexplained period of delay for each year. On further appeal by the assessee, the Appellate Tribunal reduced the penalties. Thereafter, at the instance of the assessee, the above three questions of law are referred to this court.
The first question is covered by the decision of the Supreme Court in CIT v. M. Chandra Sekhar [1985] 151 ITR 433. The questions in the Supreme Court are shown to be (at p. 436) :
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in concluding that the charging of interest indicated that the Income-tax Officer was satisfied that there was sufficient cause for delay in filing the return of income ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalties levied under section 271(1)(a) ?"
In that case, the High Court held that the presumption is that judicial or quasi-judicial duty must be presumed to have been discharged in a proper and bona fide manner. But the Supreme Courts answer was (at p. 439) : "No attempt was made by the Revenue to show that the Income-tax Officer acted arbitrarily and contrary to the procedure envisaged by the statute". The purpose of making a reference is to see whether the procedure is followed and whether the order was arbitrary. The test is not that of "proper and bona fide". The discussion in the above Supreme Court case commencing at page 439 shows that once interest is charged, penalty cannot be charged. The answer to the-first question is therefore in the negative, in favour of the assessee and against the Revenue. In view of our answer to question No. (1), questions Nos. (2) and (3) do not call for an answer.
The reference is disposed of accordingly. No costs.