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TMI Blog1979 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court decision in the case of Vegetable Products Ltd(1). As per this decision of the Supreme Court penalty had to be paid with reference to the tax after giving credit to the tax paid under s. 140 A. On this basis the penalty liviable under s. 271(1)(a) came to NIL for the asst. yr. 1967-68. The ITO, therefore, stated that the assessee's contention was correct and that the penalty was determined at NIL, though the assessee was in default. 3. For the asst. yr. 1969-70, the return of income was filed on 7th March, 1972 showing total income of Rs. 21,561. The assessment was finalised on 14th March 1972 and the total income was determined at Rs. 34,067. As there was delay in filing the return a show cause notice was issued on 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has come up in appeal before us. Our attention was pointedly drawn by Shri J.P. Shah, the ld. counsel for the assessee to the original penalty orders wherein no finding at all was given that the assessee had no reasonable cause for the delayed filing of the return of income. He pointed out that the rectification orders under s. 154 were colourless in nature and did not bring out the offence allegedly committed by the assessee by dealing with the absence of reasonable cause. He then referred to the decision of the Gujarat High Court in the case of I.M. Patel and Co.(2). He further pointed out that the ITO was wrong in resorting to s. 154 as there was no mistake apparent from the record and that the retrospective amendment did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y evidence on the point, besides merely pointing to the failure on the part of the assessee to furnish the return within time, the Department would fail so far as the penalty proceedings under s. 271(1)(a) are concerned. 8. Viewed in the light of the above discussion, we find that the original penalty orders under s. 154 are absolutely bald and barren of the necessary finding or evidence which should have been brought on record by the Department. The primary onus cast on the Department has to been discharged. The original assessment orders do not even allege that the assessee had no reasonable cause for not filing the returns in time. When the ITO thus set his face against the principles laid down by the Gujarat High Court it would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely firstly that there was no glaring mistake of law or of fact in the earlier order when it was initially made and secondly that even if such glaring mistake was the operative part of the amending order is not sound in law. Whereas the first ground touches the very juridical foundation the second ground affects only the operative part. If in a particular case the authority making the rectificatory order is found to have the jurisdiction arising from the existence of glaring mistake in the initial earlier order, and if an infirmity is held to be there only in the operative part (including the reasoning therefor) such infirmity may be curable either by higher authority in the heirarchy passing the final order itself or by a remand to the tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment) Act, 1974 may not cover delay penalty or continuing by way of appeal etc. Tribunal's decision dt. 20th August, 1976 in the case of ITO vs. Pravinchandra(3) is the basic or detailed decision. 14. The result of the said finding by me as to the exercise, learned ITO according to me rightly assumed jurisdiction when he proceeded to make the rectificatory orders. Subsequent to that stage, however, the learned ITO fell into error in having failed to find whether the default of the assessee was owing to a reasonable cause. That in turn involved two aspects i.e. the discharge by the Department of the initial onus (as contemplated in CIT vs. I.M. Patel Co.(2). to establish the assessee's awareness of the statutory obligation under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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