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TMI Blog1981 (4) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income for the assessment year 1968-69 on July 20, 1970, and the return of income for the assessment year 1969-70 on July 18, 1970. There were thus delays of nine months, twenty-one months and nine months in filing the returns of income for the assessment years 1967-68, 1968-69 and 1969-70, respectively. The income returned by the assessee in each of the said assessment years was accepted by the ITO. The income returned and assessed was Rs. 26,197 for the assessment year 1967-68, Rs. 38,573 for the assessment year 1968-69 and Rs. 28,730 for the assessment year 1969-70. In view of the delay in filing the returns, the ITO initiated penalty proceedings for the late filing of returns in each of the said assessment years under s. 271(1)(a) of the Act. In response to the show-cause notice, the explanation for the delay given by the assessee for each of the assessment years was common. The assessee explained that it could not file the return in question within time as the accountant who was 80 years old was not keeping well and it had applied for extension of time. The ITO held that the explanation given by the assessee was not reasonable. In the opinion of the ITO, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and confirmed by the AAC. It is in this background of facts that the Tribunal has referred to us the question set out above for our opinion. The Tribunal has not properly appreciated the principles which are laid down by this court in Addl. CIT v. I. M. Patel and Co. This is evident from its observation to the effect that there was no material on record to show that the assessee was made aware of its liability to file returns in time. The department had failed to discharge its initial burden of proving that the late filing of returns was without reasonable cause. The learned members of the Tribunal, who decided the assessee's appeal have, with respect, misread the above decision of this court, and placed a burden on the department which is impossible to discharge. How can the department prove whether or not an assessee was aware of his duty to file his return of income within the prescribed time ? It is true that as laid down by this court in Addl. CIT v. I. M. Patel and Co. [1977] 107 ITR 214 (Guj) [FB] the initial burden is on the department to establish by leading some evidence that, prima facie, the assessee has without reasonable cause failed to furnish the return within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h decision of this court in Addl. CIT v. I. M. Patel and Co. [1977] 107 ITR 214, on which reliance is placed by the Tribunal, does not lay down any proposition of law as stated by the Tribunal. The ratio of the decision must be understood and applied in the light of the following propositions: (1) The reason for late filing is a fact within the exclusive knowledge of the assessee and no one else, much less the revenue officials, can even make a guess about the reason. What then can the revenue officials do or be expected to do in order to discharge the burden ? (2) All that requires to be done in order to discharge the initial theoretical burden is to show that no application for extension of time was made and there did not prevail a situation in the city or town concerned which made it difficult or impossible to do so (for instance the city may be in the grip of some violent agitation with the law and order situation being such that one could not move about freely during the material period). (3) The law does not require the revenue to do the impossible. The revenue cannot ensure that every assessee is personally informed that he must file his return in time. Even if an army o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 271(3)(a), no penalty would be leviable if the income assessed does not exceed Rs. 26,500. Circular F. No. 88/104/67-II (Inv) dated January 1, 1968, issued by the CBDT also clearly states that in the case of a registered firm, no penalty is leviable unless the income of the registered firm exceeds Rs. 26,500. As the income of the assessee-firm returned and assessed was less than Rs. 26,500, no penalty is leviable for the assessment year 1967-68. It appears that the attention of the taxing authority and the Tribunal was not drawn to this aspect of the case. It must, therefore, be held that the penalty for the assessment year 1967-68 was rightly deleted by the Tribunal. But in so far as the assessment years 1968-69 and 1969-70 are concerned, as held above, the Tribunal was not justified in deleting the penalties. Before parting with this matter, we may refer to the last submission which was made by Mr. N. R. Divatia. Mr. Divatia pointed out that in the assessment year 1968-69, the assessee had to pay a penalty of Rs. 4,647 under s. 271(1)(a) and penal interest of about Rs. 1,600 as against the tax of Rs. 1,074. For the assessment year 1969-70, the penalty was Rs. 1,087 and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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