1995 (4) TMI 48 - HC - Income Tax

Summary

Issues Involved:
1. Imposition of penalty u/s 271(1)(a) of the Income-tax Act, 1961.
2. Alleged violation of Articles 14, 265, and 300A of the Constitution of India.
3. Discrepancy in appellate decisions.
4. Jurisdiction and procedural matters.

Summary:

1. Imposition of penalty u/s 271(1)(a) of the Income-tax Act, 1961:
The petitioners, trustees of a family trust, were called upon to pay penalties for not filing income tax returns for the assessment years 1980-81 and 1981-82. The trust's only income was from property co-owned with other trusts and Hindu undivided families. A receiver was appointed by the High Court of Bombay to manage the property, and the trust had informed the Income-tax Officer (ITO) about this, requesting communication with the receiver for filing returns. Despite this, the ITO issued show-cause notices and imposed penalties, which were upheld by the Appellate Assistant Commissioner and the Commissioner of Income-tax.

2. Alleged violation of Articles 14, 265, and 300A of the Constitution of India:
The petitioners contended that the impugned action was ultra vires, contrary to law, and violative of Articles 14 (equality before law), 265 (taxation only by authority of law), and 300A (right to property) of the Constitution of India. They argued that the penalties were imposed despite the receiver's appointment and the pending application for transfer of the case to Bombay.

3. Discrepancy in appellate decisions:
The petitioners highlighted that in similar circumstances, another Appellate Assistant Commissioner had granted relief to other co-owners by setting aside penalties, recognizing the appointment of the receiver as a reasonable cause for not filing returns. However, the appeals of the present petitioners were dismissed by a different Appellate Assistant Commissioner, leading to contradictory decisions. The revisional authority also dismissed the revision applications, stating that the earlier favorable orders were not based on a correct appreciation of facts.

4. Jurisdiction and procedural matters:
The Department argued that the petitioners had an alternative remedy by filing an appeal to the Commissioner u/s 246 of the Act, which they did not avail. Instead, they directly approached the Commissioner by filing revision applications u/s 264. The court, however, noted that the petitions were filed after the revisional authority exercised jurisdiction and rule was issued by the court.

Conclusion:
The court found that the authorities committed an error of law apparent on the face of the record by not granting relief to the petitioners. The court held that there was reasonable cause for not submitting the returns in time due to the receiver's appointment and ongoing litigation. Consequently, the penalties imposed u/s 271(1)(a) were quashed and set aside. The petitions were allowed, and the rule was made absolute with no order as to costs.