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TMI Blog1982 (12) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case, the order of the Appellate Tribunal cancelling the penalties under section 273(b) of the Act for the assessment years 1957-58 and 1959-60 is sound in law ? " The assessee was a firm carrying on business as excise contractors during the accounting years relevant to the assessment years 1957-58 and 1959-60. For the accounting year relevant to the assessment year 1957-58 the assessee was granted licences in respect of a large number of shops, about 100 in number, spread over Telengana and Karnataka areas of the former Hyderabad State. For this assessment year, the assessee filed return, voluntarily, on April 3, 1958, showing a loss of Rs. 20,005. No action was taken upon this return until April 19, 1961, when a notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the explanation offered by the assessee for not filing the estimate of advance tax was acceptable. Thereupon, the Revenue asked for and obtained this reference to this court. We may mention at this stage that at an earlier stage of penalty proceedings, a controversy had arisen whether penalty proceedings under s. 273 of the 1961 Act can be taken in respect of the assessment years in question. That was concluded by this court on a reference. It was held that proceedings under s. 273 of the 1961 Act are competent. The Tribunal was directed to examine the question of the assessee's liability to penalty, keeping in mind the relevant facts and circumstances of the case. In pursuance of the said order, the Tribunal heard the appeals again and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation is not enough, the ITO must record a finding that there was no reasonable cause for not filing the estimate. Then alone, he gets the power to impose penalty. Even there, the ITO has to exercise his discretion and determine, having regard to the facts and circumstances of the case, including the conduct of the assessee, whether penalty should be levied and if so, in what measure. In such a case, there is no question of any other or further burden of proof lying upon the Department. The decisions rendered under s. 271 (1)(c) which speak of initial burden and ultimate burden have no application to a situation under s. 273(1)(b) or s. 271(l)(a). Dealing with a similar obligation cast by the Orissa Sales Tax Act, the Supreme Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1) has been deleted by the Finance Act, 1964). We may in this connection refer to the decision of the Punjab and Haryana High Court in Addl. CIT v. Roshan Lal Kuthiala [1975] 100 ITR 329, where it is held that whether there is a reasonable cause for not filing the return or estimate within the prescribed time, is a pure question of fact. In other words, the ITO and for the same reason, the appellate authorities have to examine the explanation and the material, if any, placed by the assessee in support of the explanation, to determine whether there was in fact reasonable cause for not filing the return or estimate within the prescribed time and if not satisfied about the explanation, then consider the facts and circumstances of the case w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s served upon the assessee to file a return within a particular time which was subsequently extended. The assessee, however, filed the return only after the expiry of the prescribed date. The ITO completed the assessment, but did not charge interest under s. 139 for the late submission of the return, but later rectified his order under s. 154 and levied penal interest. On appeal, the AAC accepted the contention of the assessee that the ITO must be deemed to have exercised his discretion in favour of the assessee in not charging penal interest and accordingly allowed the appeal. The Tribunal dismissed the Department's appeal no doubt on a different reason. However, on a reference, the Gujarat High Court held that on a plain reading of cl. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the initial onus lay, they examined the facts of the case and held that there was reasonable cause. This decision cannot be held to be an authority for the proposition that even in a case where the assessee's explanation is rejected, the Department must go further and prove that failure to furnish the estimate or return is deliberate or wilful. It is unnecessary to refer to the decisions cited by the learned counsel under s. 271(1)(c) for the reasons pointed out by us hereinbefore. Lastly, however, we may refer to P. V. Kurian v. ITO [1961] 43 ITR 432, a decision of the Kerala High Court relied upon by the Tribunal and also by the counsel for the assessee before US. In this decision, a learned single judge of the Kerala High Court held, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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