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TMI Blog1981 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... 1960-61, against its profits for the assessment year l961-62, notwithstanding the fact that the said loss was apportioned amongst the partners and was carried forward in their individual assessments ? (3) Whether, on the facts and in the circumstances of the case, the maximum amount of penalty imposable against the assessee was Rs. 25 ? " On hearing the points at issue between the parties, we think that instead of the said three questions, only one question framed by us below would cover fully the controversy. The question as re-framed by us would be as follows : " Whether, on the facts and in the circumstances of this case, the Tribunal was justified in holding that there was no obligation on the part of the assessee to file a retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The said notice was admittedly served on the assessee. In reply to the said notice, the assessee sought to explain the delay by stating that it was prevented from filing a return as its accountant was not well. The ITO rejected the said explanation, as according to him out of the six partners of the firm or the employees of the firm, any one could have closed the accounts and filed the return in time. The ITO thereafter made an order under s. 271 (1)(b) of the I.T. Act, imposing on the assessee penalty at the rate of 2% on the amount of taxable income for every completed month of delay in filing the return for the said assessment year. In the appeal to the AAC against the said order, two contentions were raised by the assessee. Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, as the assessee was not expected to anticipate the income that was likely to be determined by the ITO or by the AAC. On the said contention the Tribunal held that as the assessee bona fide believed that its income was R. 21,219 and as the AAC had disallowed the deduction, on which there could be an honest difference of opinion, the assessee's income was not liable to tax within the meaning of the provisions of the IT. Act and the maximum amount of penalty imposable was Rs. 25 only. The said finding of the Tribunal has been questioned before us in this reference. Section 271 of the I.T. Act deals wit the imposition of penalty for failure to file a return, non-compliance with notices, etc. Section 271(3)(b) which is relevant for ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tomobile and Accessories Agency 1978] 111 ITR 411 (Gauhati) and (2) CIT v. Agrawal Brothers [1979] 116 ITR 768 (MP). We see no reason to disagree with the said view. In this case, admittedly, the income disclosed by the assessee-firm in its return, namely, Rs. 21,219, was below the limit of the taxable income for the firm. The only question that would, therefore, survive for consideration would be whether such disclosure of income by the assessee could be considered to be bona fide. The question whether such a disclosure was bona fide or not was a question of fact and was primarily for the Tribunal to decide. In this case the Tribunal held that the provisions of s. 271(3)(b) were attracted as the assessee had filed its return showing no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and setoff against the profits in the concerned assessment year 1960-61, and if that was done, then even on the basis of the assessee's assessed income of Rs. 56,553 the assessee's income for the said assessment year would be below the taxable income of the firm. However, the said view of the Tribunal cannot be considered to be correct, in view of the decision of the Nagpur Bench of this court in the case of Ballarpur Collieries Co. v. CIT [1973] 92 ITR 219. However, for the purpose of determining the question before us, the said view of the Tribunal is not relevant and unnecessary to be considered. We would, therefore, answer the re-framed question in the affirmative, and in favour of the assessee. The parties to bear their own costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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