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TMI Blog1974 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified to hold that there was a delay of one month only till February, 1964, when actually under section 139(1) the delay was from October 1, 1963, to February 18, 1964, for four months ? " The facts of Income-tax Cases Nos. 26 and 27 of 1972 are identical. The only difference is that they pertain to two partners of M/s. Shahzada Hoisery Mills. I.T.C. No. 26 relates to Vidya Sagar and I.T.C. No. 27 relates to Anand Sagar. The dispute relates to the assessment year 1963-64. No return of income under section 139(1) was received up to the end of November, 1963. A notice under section 139(2) was served upon the assessees on December 12, 1963. In compliance with this notice, the assessees submitted a return declaring, besides other income, income from the registered firm at Rs. 34,849 (in I.T.C. No. 26) and at Rs. 34,779 (in I.T.C. No. 27) on February 21, 1964. Later on, the assessees submitted a revised return and the Income-tax Officer on 30th March, 1968, computed the income from the assessees' share in the firm, Messrs. Shahzada Hosiery Mills, at Rs. 91,153. The Income-tax Officer was of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount books the actual amount of the gross profit was more by Rs. 1 lakh than actually shown. The assessee filed a revised return on 26th March, 1968, showing an income of Rs. 1,73,952. The assessment was then completed taking into account the concealed income. The total income was determined by the Income-tax Officer at Rs. 1,82,376. He also issued notice under section 271(1)(a) for delay in filing the return and also a notice under section 271(1)(c) for concealment of a sum of Rs. 1,00,000. As the minimum penalty imposable was more than Rs. 1,000, the matter was referred to the Inspecting Assistant Commissioner of Income-tax. The Income-tax Officer levied a penalty of Rs. 61,550 under section 271(1)(a). The Income-tax Officer imposed no separate penalty for making a delayed return under section 139(2). The assessee then moved the Appellate Assistant Commissioner against the order of the Income-tax Officer imposing a penalty of Rs. 61,550. The Appellate Assistant Commissioner rejected the appeal. The assessee's stand was that at no stage did the Income-tax Officer declare the return filed on 18th February, 1964, as an invalid or incomplete return. It was the duty of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 --------------- The Judicial Member came to the conclusion that the assessee had reasonable cause for filing the delayed return in March, 1968. The reasons of the Judicial Member for this conclusion may be best stated in his own words : " The fact that the signature of Shri Amarjit Singh had been scored out by the counsel before handing over the blank form and the return filed on the peon book of the counsel does go to show a confused state of affairs or a state of affairs which could, at worst, tantamount to negligence. The element of conscious commission of the offence does not appear to be there. Even if they were taken to be there for the sake of argument, the totality of circumstances do lead to a conclusion that at least the assessee was not aware of this defect in the return filed and he was fortified in his belief that the return filed was proper and complete by the conduct of the Income-tax Officer in processing a provisional assessment and determining the demand payable thereof. If it is the duty of the assessee to file the return duly signed then it is equally the duty of the Income-tax Officer to see that the return filed is proper. The Income-tax Officer di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, he agreed with the Judicial Member that : (a) the penalty under section 271(1)(c) must be based on the second return, and (b) the period of default under section 271(1)(a) runs up to the first return only. According to him, the second return would form the basis of penalty, but with regard to penalty under section 271(1)(a), it was held that " the assessee had reasonable cause for delay inasmuch as the first return was accepted and a provisional assessment based thereon. The assessee was, if nothing, lulled to sleep. " The ultimate decision in which both the Members of the Tribunal concurred is as follows : 1. There was conscious effort at concealment. 2. The first return which was unsigned cannot be taken note of for penal action under section 271(1)(c). 3. The penalty under section 271(1)(c) should be computed on the basis of the second return filed on March 26, 1968. 4. There was a delay in filing the return and penalty under section 271(1)(a) is exigible. 5. The delay should be computed up to the date of the filing of the first return, i.e., up to February, 1964. 6. The assessee had a reasonable cause for not furnishing the return thereafter inasm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w sought to be referred in Income-tax Cases Nos. 26 and 27 of 1972 and the second question in Income-tax Case No. 28 of 1972 do arise. The only dispute is with regard to the first question in Income-tax Case No. 28 of 1972. According to the counsel for the Commissioner of Income-tax, this is a question of law and does arise out of the order of the Tribunal, whereas, according to the counsel for the assessee, this is a pure question of fact and being not a question of law cannot be referred for the opinion of this court. The Tribunal, while coming to the conclusion that there was a reasonable cause for the delay in furnishing the second return, observed that the first return, though invalid, was accepted as good by the department inasmuch as the department proceeded to make a provisional assessment thereon. If the department had rejected the first return, the assessee would not have been lulled to sleep and could have furnished a valid return soon thereafter. The question that requires determination is whether, on these facts, the finding recorded by the Tribunal is justified, and, in the second place, whether the finding that there is a reasonable cause is a finding of fact or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In my opinion, the instant case is covered by the fourth proposition and, therefore, I see no escape from the conclusion that the first question in income-tax Case No. 28 of 1972 is a pure question of fact. The department cannot, therefore, ask for a reference of this question. In Manindra Land and Building Corporation Ltd. v. Bhutnath Banerjee it was observed : " ......the High Court fell in error in interfering with the finding of fact arrived at by the Subordinate Judge with respect to the appellants having sufficient cause for not making an application for bringing the respondents on record within time........ " It is no doubt true that these observations were made in a petition for revision under section 115 of the Code of Civil Procedure. But these observations clearly show that the question whether there is sufficient cause or not is none the less a question of fact. The only grounds on which a conclusion of fact can be challenged are (a) that it is not supported by any legal evidence or material, and (b) that the conclusion of fact drawn by the Appellate Tribunal is perverse and is not rationally possible. See, in this connection, Oriental Investment Co. P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been within time as excluding the time spent in obtaining copies of the judgment and decree, the period taken by the plaintiff did not exceed thirty days. But it is urged that the court of the district judge to which the memorandum of appeal had been transferred and in which the copy of the decree was filed, was not competent to hear the appeal under section 39(3), Punjab Courts Act, read with Notification No. 81-G, dated 14th February, 1924, and that the transfer of the appeal by the district judge from the court of the senior subordinate judge was ultra vires as the latter court was not subordinate to the former within the meaning of section 24, Civil Procedure Code, for the purpose of appeals of this kind. Now assuming that these contentions are correct--a matter on which I do not think it necessary to express any opinion in this case--I am of opinion that the appellant should have been given the benefit of section 5, Limitation Act. The learned senior subordinate judge has held that the appellant cannot be said to have exercised due care and caution in the matter of the presentation of the appeal. But it seems to me that far from this being the case the appellant has acted thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturned to him. I, hold, therefore, that the time during which the memorandum of appeal remained in the district court should have been excluded and the appeal held to be within time, even if it be assumed that the order of Mr. Munshi Ram, district judge, transferring the case was ultra vires or otherwise illegal. Mr. Badri Das finally contends that this was a question for decision by the lower appellate court and that in second appeal this court cannot interfere with its conclusion. But in this case the facts are not in dispute, and the only question is whether the admitted facts and circumstances constitute sufficient and reasonable cause. It has been recently held by Lord Sankey L.C. in Shotts Iron Co. Ltd. v. Fordyce, at page 508, that such a question 'is one of law and not of fact'. In giving his decision, the Lord Chancellor referred with approval to the dictum of Lord Parmoor in King v. Port of London Authority, at page 31 : 'No doubt the relevant facts should be found by the learned judge and then it becomes a question of law whether these facts are such as to constitute a reasonable cause within the provision of the statute.' I am not unmindful of the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. It appears to their Lordships that the only question involved is a question of fact on which there are concurrent findings. It is quite true that according to English law it is for the judge and not for the jury to determine what is reasonable and probable cause in an action for malicious prosecution. The jury finds the facts. The judge draws the proper inference from the findings of the jury. In that sense the question is a question of law. But where the case is tried without a jury there is really nothing but a question of fact and a question of fact to be determined by one and the same person. It appears to their Lordships that the certificate allowing the appeal to Her Majesty must have been granted under a misapprehension. " It will appear that the decision in Kale Khan's case runs counter to the decision of the Privy Council quoted above. It, therefore, cannot be accepted as laying down the correct rule of law. Besides this, the decision in Kale Khan's case proceeded on its peculiar facts and cannot be taken as an authority for laying down a general rule that in every case the decision as to reasonable or probable cause is on a question of law. In both the decisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t do not do so. This will be apparent from the observations of Lord Macmillan in the case of Shotts Iron Company Ltd. : " It is impossible to frame a definition of a reasonable cause for omitting to make a claim. Indeed it would be unreasonable to attempt the task. The decided cases on the subject, from the mass of which Mr. MacRobert considerately drew only a few samples, furnish an unhappy instance of history teaching by examples, for the only lesson which they impart is that no one case can govern any other and that each case depends upon its own circumstances. " These observations clearly denote that though in the case before the House of Lords the question whether there was reasonable cause or not was considered on the facts of that case as raising a question of law ; the rule is not of general application. On the facts and in the circumstances of each case, a different result may follow. So far as the instant case is concerned, I have no doubt in my mind that the question whether there is or is not a reasonable cause is a pure question of fact and, therefore, I am not prepared to ask the Tribunal to refer the first question in Income-tax Case No. 28 of 1972 for the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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