9911796707
TMI Blog1981 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... on that count and assessed the assessee on the total income of Rs. 69,080. The ITO directed the issuance of a notice, for the late submission of the return of income, under s. 271 (1)(a) of the I.T. Act, 1961. In reply to the show-cause notice, the assessee, inter alia, stated that since the income returned for the assessment year in question was only Rs. 25,854, which was below the limit prescribed under s. 271(3) of the Act for levying a penalty, no notice for an initiation of penalty proceedings was competent. The assessee further contended that it was only on account of the substantial addition made by the ITO that the assessee's default to file the return was aggravated and, therefore, there was a genuine cause for not filing the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal observed as under in para. 9 of its order rejecting the appeal: " 5. No doubt the penalty proceedings are quasi-criminal but the material regarding reasonable cause has to come from the assessee in the first instance. The assessee's reply to the show-cause notice, according to our thinking, does not bring out any reasonable cause. Considering all these aspects, we do not see any substance in the assessee's appeal. " The assessee, therefore, moved the Tribunal for a reference and one of the questions submitted by the assessee for the reference to this court was in the following terms: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in placing the burden of proof on the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when it rejected the appeal of the assessee. The Full Bench of this court has considered the question as to whether the absence of a reasonable cause for a failure to file a return is an ingredient of the offence and, therefore, the burden of proof is on the Revenue or whether it is an extenuating circumstance which can be pleaded by way of defence of the assessee for his default in filing the return in time. The Full Bench was concerned in I. M. Patel's case [1977] 107 ITR 214 (Guj), with penalty proceedings initiated under s. 271 of the I.T. Act, 1961. In that context the Full Bench ruled as under (Headnote): " Whenever a statute defines an offence and provides a punishment for it, it is for the prosecution to prove all the ingredients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file the returns within the time specified, Mere failure to file the return within the time without anything more will not expose the assessee to penalty. Mere falsity of the explanation on the part of the assessee is not enough to constitute an offence under the section. In view of the decisions of the Bombay High Court in Commissioner of Income-tax v. Gokuldas Harivallabhdas [1958] 34 ITR 98, and of the Supreme Court in Commissioner of Income-tax v. Anwar Ali [1970] 76 ITR 696, it is clear that the burden of proving all the ingredients of the offence is upon the Department and if the Department fails to lead any evidence on the point, besides merely pointing out that there was failure to furnish the returns within time, the Department wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden of proof upon the assessee and if the Tribunal has wrongly placed the burden of proof on the assessee where it does not lie, the conclusion is inescapable that the order made in pursuance of such a wrong onus of proof would be vitiated. On that count alone, the order of penalty was not sustainable. We have also examined as to whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the imposition of penalty under s. 271(1)(a) was justified. In the first place, it should be noted that the contention of the assessee in his explanation to the showcause notice for the initiation of penalty proceedings was, inter alia, that in the case of a registered firm unless the income is to the tune o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or it to file the return on the due date; and (2) the addition had been made by the ITO on account of a difference in the valuation according to the ITO, of the closing stock of the land, the Tribunal was not justified in concluding that the assessee was liable to be penalised. In that view of the matter, therefore, question No. (3) also must be answered in the negative. Question No. (2), in our opinion, therefore, would not be necessary to be answered. The result is that this reference should be accepted by answering questions Nos. (1) and (3) in the negative, that is, in favour of the assessee and against the Revenue. Question No. (2) does not require to be answered at all. The Commissioner shall pay costs of this reference to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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