ORDER
K.R. Dixit, Judicial Member
1. In all these appeals the issue is the same arising out of the same facts. Therefore, they are disposed of by this common order. That issue is regarding the levy of penalty for late filing of income-tax returns. All the assessees had submitted the returns late and the ITO imposed penalty under Section 271(1)(a) of varying amounts. The assessees were called upon to explain the delay. According to the penalty orders, the assessees, in ITA Nos. 795 and 796 did not file any reply while the assessee in ITA No. 797 filed a reply that the work of income-tax was handled by one advocate, that the assessee had handed over that work to another practitioner filed the return and hence the delay. The ITO considered this reply unsatisfactory. According to the penalty order in ITA No. 795 the penalty had been imposed because the ITO found that delay was very long i.e. of 17 months which could not be ignored. The penalty order in ITA No. 796 shows that the assessee had asked for benefit of Amnesty Scheme but the ITO held that it could not be granted at that stage and so he imposed the penalty. In ITA No. 797 the penalty order shows that it has been imposed because the ITO did not find the explanation of the assessee to be satisfactory and it notes that the assessee was having huge income of Rs. 64,040 and had paid Rs. 20,000 as self-assessment tax which showed that the assessee knew his responsibility of filing the return in time.
2. The Dy. Commissioner has passed the same order in all the cases confirming the penalties. Hence these appeals. According to the appellate order, a plea was taken before him that the assessees were not aware of the liability to file return. This was rejected on the ground that the assessees are having substantial income from the firm and the firm was filing its return. The assessees had relied upon certain decisions. In that case, the question was regarding levy of penalty for late submission of wealth-tax return. The Dy. Commissioner has distinguished that case on the basis that it was a case of wealth-tax return while in the present cases the assessees are partners of a firm which was filing the return and so the assessees knew their responsibility for filing the return. He stated that ignorance of law could not be taken as a reasonable cause for the delay. The decision in the case of Ranjitsinghji by Ahmedabad Bench-A dated 15th December, 1986 was cited before him but the Dy. Commissioner has distinguished it on the ground that that was a case where the assessee was an IAS Officer out of India for quite some time while his properties were in India and so he had to depend upon his advocate while in these cases the assessees did not have to depend upon their advocate which was shown by the facts that the assessees had changed their advocate.
3. Before the Tribunal, the assessees’ advocate explained in detail the plea taken before the Dy. Commissioner. He stated that the income-tax work of the firm where the assessees ware partners was earlier handled by one advocate and the assessees were solely depended upon that advocate. Thereafter the income-tax work was entrusted to the present advocate of the assessees who enquired from the assessees whether return for the asst. year 1982-83 as well as the return for the asst. year 1981-82 had been filed and found that the former advocate had not filed those returns nor had he advised the assessees to file the same. Thereupon the present advocate advised the assessees to do so and so the returns were filed. According to the assessees this was reasonable cause for not filing the returns. It is argued that the delay was because of the facts that the assessees were dependent upon another advocate who had not advised them correctly and relied upon the decision in the case of CWT v. Ramniklal D. Mehta [1982] 136 ITR 729 (Ori.) where the Tribunal had observed that normal presumption was that almost all the assessees were completely dependent upon the lawyers or advisers for the highly technical taxation affair and in that case it was held that the Tribunal was justified in deleting the penalty. He also relied upon the aforesaid Tribunal decision in the case of Ranjitsinhji (supra) which was relied upon before the Dy. Commissioner. Regarding the Dy. Commissioner’s observation that the assessees’ not being aware of the responsibility to file the return was not a reasonable cause for filing the return late. The assessee’s advocate relied upon the decision of the Supreme Court in the case of Motilal Padampat Sugar Mais Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 where it has been held that there was no presumption that every person knows the law and that such a statement is incorrect.
4. The learned Departmental Representative, on the other hand, put forward the same reasons as those given by the ITO with a slight variation that the firm was a compedium of partners and since the returns were filed by the firm it must be said that the partners knew about their responsibility to file the return. He also distinguished the aforesaid decision in the case of Ranjitsinhji (supra) on the ground that the assessee was an IAS Officer living outside India whereas the present assessees are living within India and so they did not have to depend upon the advocate to file the returns.
5. In our view, it would be fair to say that most people have to depend upon their advocate or tax consultant to inform them about their responsibility regarding taxation. For that purpose, it is not necessary to rely upon the above Tribunal decision in the case of Ranjitsinhji (supra). It may be possible to distinguish that decision on the ground that the assessee in that case was outside India whereas the present assessees are within India and that case was regarding wealth-tax and the properties were in India. The taxation laws being generally complicated most people have to depend upon tax advisers to advise them about their responsibility in that regard. In the present case it has been stated in the grounds of appeal that “the assessees belonged to the Harijan Community and they are illiterate”. The learned D.R. has not controverted this fact. In that situation it would be very unreasonable to expect them to be aware of their responsibility for filing the return. It may be true that the firms in which they are partners might be filing the return but from that it does not necessarily follow that they would know about their duty to file their individual returns. On the contrary they might well understand that since the returns have been filed in the case of firm it was not necessary that they should file the individual returns. However, in the case of assessee Muljibhai Virabhai as pointed out earlier the penalty order has stated that self assessment tax had been paid which according to the ITO showed that the assessee knew his responsibility for filing the return. In our view, paying of the self-assessment tax is an act involving a greater discharge of liability than filing the return. Therefore, if an assessee had done that it would not be reasonable to impose the penalty on him on the ground that he knew his responsibility for filing the return. If that was done an assessee who does not pay the self-assessment tax would be in a better position than an assessee who pays it. The requirement of filing of return is a specific separate requirement. The assessees as stated above had to depend upon a tax adviser for the advice and they do mostly what they are advised to do. If they are advised to pay the self-assessment tax they pay it. If they are advised to file the return they file it. If they are advised to file the return but not advised to pay the self-assessment tax they file the return but do not pay the tax. If they are advised to pay the self-assessment tax but not advised to file the return they pay the tax but do not file the return and finally if they are not advised to do either they do neither. Therefore, all the above appeals fall in one category i.e., the dependence of the assessees on their tax adviser. The facts in this case show clearly that the assessees had depended upon their earlier adviser and whose mistake it was not to have advised the assessees to file the returns. The bona fides of the assessees have been proved with filing the return upon their new adviser’s advice. Finally, one more argument which the assessee have put forward has also appealed to us. The Amnesty Scheme which was declared subsequently would cover the cases of those assessees which came to light after the scheme came into effect. Is it the fault of these assessees that their default was discovered earlier and action thereon was taken before the coming into effect of the Amnesty Scheme ? That Scheme would even cover cases of longer delays the starting points of which were even prior to those in the case of the present assessees. For this reason also we are of the view that penalties cannot be imposed in these cases. They are therefore, cancelled.
6. All the appeals are allowed.