S. Ajit Singh Rais G... v. The Commissioner Of ..., Gauhati High Court, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

Income-Tax Reference No. 14 of 1975

Attorney(S)

Mr. J.P Bhattacharjee, Mr. K.C Bezbaruah, Mr. S.N Sarma, Mr. R.P Agarwalla. Mr. R.L Jain & Mr. R. Gogoi

Judges

Hon'ble Mr. Justice R. K. Manisana Singha
Hon'ble Mr. Chief Justice A. S. Raghuvir

Acts

SECTION 271 I INCOME TAX ACT 1961
SECTION 256 INCOME TAX ACT 1961
section 139(1) of the Income-Tax Act, 1961
Section 271(1)(a) of Income-tax Act, 1961,

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Smart Summary

Factual and Procedural Background

This opinion arises from a reference made under clause (1) of section 256 of the Income-tax Act, 1961, concerning penalty imposition on the assessee S. Ajit Singh. The Income-tax Officer imposed penalties under section 271(1)(a) of the Income-tax Act, 1961. On appeal, the Appellate Assistant Commissioner condoned the delay in filing returns and recomputed penalties based on the unexplained delay. The Appellate Tribunal further reduced the penalties. Subsequently, at the assessee's instance, three questions of law were referred to this Court for determination.

Legal Issues Presented

Whether the Tribunal was justified in holding that despite the charge of interest under clause (iii) of the proviso to section 139(1) of the Income-Tax Act, 1961, a penalty can be validly imposed under section 271(1)(a) of the Income-tax Act, 1961?
Whether the Tribunal was justified in holding that penalty can be levied under section 271(1)(a) of the Income-tax Act, 1961, despite the filing of the return within the time allowed under section 139(4) of the Income-tax Act, 1961?
Whether the Tribunal was justified in holding that the delay by the assessee in filing returns for the assessment years 1963-64 to 1967-68 was without any reasonable cause, and that the Appellate Assistant Commissioner was not justified in condoning any part of the delay or in reducing the penalties levied by the Income-tax Officer?

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
C.I.T v. Chandra Sekhar (1985) 151 ITR 433 (SC)	The principle that once interest is charged under section 139(1) proviso, a penalty under section 271(1)(a) cannot be validly imposed.	The Court held that the Supreme Court's decision answers the first question in the negative, favoring the assessee and against the revenue, thereby negating the validity of imposing penalty where interest is charged.

Court's Reasoning and Analysis

The Court examined the first question in light of the Supreme Court's ruling in C.I.T v. Chandra Sekhar, which clarified that charging interest under the proviso to section 139(1) indicates the Income-tax Officer's satisfaction of sufficient cause for delay, precluding the imposition of penalty under section 271(1)(a). The Court emphasized that the test is not whether the officer acted properly and bona fide, but whether the procedure envisaged by the statute was followed and whether the order was arbitrary. Since no arbitrary action was shown by the Revenue, and interest was charged, the penalty could not be sustained. Consequently, the Court found it unnecessary to answer the second and third questions.

Holding and Implications

The reference is disposed of accordingly.

The Court ruled that penalties under section 271(1)(a) cannot be validly imposed when interest under the proviso to section 139(1) has been charged. This decision directly benefits the assessee by negating the penalty imposition in these circumstances. No costs were awarded. The Court did not establish any new precedent beyond affirming the Supreme Court's existing ruling.

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S. Ajit Singh Rais Gar-Ali, Jorhat v. The Commissioner Of Income-Tax North Eastern Region, Shillong .

A. Raghuvir, C.J:— The reference in this case was made under clause (1) of section 256 of the Income-tax Act, 1961.

2. The three questions referred read as follows:

(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that despite the charge of interest under clause (iii) of the proviso to section 139(1) of the Income-Tax Act, 1961 a penalty can be validly imposed under Section 271(1)(a) of the Income-tax Act, 1961?

(2) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that penalty can be levied under Section 271(1)(a) of Income-tax Act, 1961, inspite of the filing of the return within the time allowed under Section 139(4) of the Income-tax Act, 1961?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the delay by the assessee in filing the returns for the assessment years 1963-64 to 1967-68 was without any reasonable cause and so the Appellate Assistant Commissioner was not justified in condoning any part of the delay in the filing of the returns for those years and in reducing the amount of penalties levied by the Income-tax Officer?”

3. S. Ajit Singh is the assessee. The Income-tax Officer in his case imposed penalty under clause (a)(i) of section 271 of the Income-tax Act, 1961.

4. On appeal the Appellate Assistant Commissioner condoned the delay and recomputed the penalties on the basis of unexplained period of delay for each year. On further appeal by the assessee the Appellate Tribunal reduced the penalties. Thereafter, at the instance of the assessee the three questions of law are referred to this Court.

5. The first question is covered by the decision of the Supreme Court, (1985) 151 ITR 433 (SC), C.I.T v. Chandra Sekhar. The questions in the Supreme Court are shown to be:— “1. Whether, on the facts and in the circumstances of the case, the Appellate-Tribunal was justified in concluding that the, charging of interest indicated that the Income-tax Officer was satisfied that there was sufficient cause for delay in filing the return of Income? (2) Whether, on the facts and in the circumstances of the case, Tribunal was justified in cancelling the penalties levied under section 271(1)(a)?”

6. In that case, the High Court held the presumption that judicial or quasi-judicial duty must be presumed to have discharged in proper and bona fide manner. But the Supreme Court's answer was: “No attempt was made by the Revenue to show that the ITO acted arbitrarily and contrary to the procedure envisaged by the statute”. The purpose of making reference is whether the procedure is followed and whether the order was arbitrary. The test is not that of “proper and bona fide”. The discussion in the above Supreme Court case commencing at page 439 shows once interest is charged, a penalty cannot be charged. The answer to the first question is in the negative, in favour of the assessee and against the revenue. In view of answer to question No. 1; questions No. 2 & 3 do not call for an answer.

7. The reference is disposed of accordingly. No costs.

S. Ajit Singh Rais G... v. The Commissioner Of ...