JUDGMENT
S.D. Dave, J.
1. This income-tax reference arises under section 256(2) of the Income-tax Act, 1961, and that also in compliance with this court’s order dated July 31, 1978.
2. The questions referred to us are as under :
“(1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in sustaining the order of penalty under section 271(1)(a) of the Income-tax Act, 1961 ?
(2) Whether there was any evidence on record to come to the conclusion that the initial burden on the Department was discharged ?
(3) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that non-availability of share of profit from two firms was not a reasonable cause for delay in filing the returns of income ?
(4) Whether, on the facts and in the circumstances of the case and in view of the reply to the show-cause notice under section 274 read with section 271(1)(a) of the Act and in view of the Income-tax Officer not disputing as incorrect the reason for delay in filing the return of income being non-availability of share of profit from the firm, the Tribunal was justified in law in holding that it was not proved that the assessee did not know the share income from the said firms before the due date of filing of the return ?”
3. The return of income for the assessment year 1967-68 was required to be filed on or before August 15, 1967, while the same for the assessment year 1968-69 was required to be filed on or before June 30, 1968. The assessee, however, failed to file the returns within the prescribed time and, therefore, the Income-tax Officer issued notices for the above said years under section 148 of the Income-tax Act, 1961, and they were duly served upon the assessee on September 17, 1970. The assessee, however, filed the returns of income for both the above said years on March 31, 1971. As the returns were not filed within the prescribed time, the Income-tax Officer called upon the assessee to show cause as to why penalty should not be levied for each of the above said years. In response to these notices, the assessee submitted an explanation that he was a partner in two firms, namely, M/s. Raju Transport and M/s. Shaileshkumar and Co., and that he had no source of income besides share income from the above-said two partnership firms. It was submitted that M/s. Raju Transport had filed the return of income for the above said two years on March 31, 1971. The return of income of M/s. Shaileshkumar and Co. was filed on March 22, 1971. The assessee submitted that as he did not know his share of profit from the abovesaid two firms, he could not file the returns within the prescribed time. The Income-tax Officer rejected the explanation furnished by the assessee and levied the penalty of Rs. 1,567 for the assessment year 1967-68 and Rs. 937 for the assessment year 1968-69.
4. Aggrieved by the said orders of penalty imposed by the Income-tax Officer, the assessee carried the matter in appeal before the Appellate Assistant Commissioner who had, by his order, held that the burden of proving that the assessee was prevented by sufficient cause from filing the returns within the time was on the assessee and that the assessee had failed to discharge the said burden. However, it was held by him that the penalties shall have to be related only to the tax payable on the total income finally determined in the assessee’s case. He, therefore, directed the Income-tax Officer to scale down the penalties correspondingly. The matters were carried before the Tribunal by the assessee, and he had contended that his only source of income was the share income from the abovesaid two partnership firms, and that the said firms had filed their returns of income for the abovesaid two years after the due date. It was argued on the basis of this fact that there existed a reasonable cause which prevented the assessee from furnishing the returns of total income in time in respect of the abovesaid two years. The Tribunal had taken note of the fact that the assessee had, admittedly, not applied for extension of time for filing the returns and that the assessee had failed to seek for extension of time even after the receipt of the notices under section 148 of the Act. It was also taken into consideration by the Tribunal that the returns were filed only on Mach 31, 1971, and that, in the past also, the assessee had filed the returns of income for the assessment years 1963-64, 1965-66 and 1966-67, late and that the assessee on that count had also suffered penalties for not filing returns in time for the assessment years 1965-66 and 1966-67. The Tribunal had concluded that the assessee had failed to furnish the returns within time without a reasonable cause. The Tribunal had examined the plea of the assessee that the abovesaid partnership firms from which the assessee derived share income were late in filing their returns. Anyhow, the Tribunal had taken the view that merely up their accounts was not per se a reasonable cause for not filing the returns within the prescribed time. In the result, therefore, it was held by the Tribunal that no reasonable cause was established for the delay in filing the returns for the abovesaid two years under consideration. In view of the abovesaid conclusion, the appeals filed by the assessee came to be dismissed by the Tribunal by orders dated February 19, 1977. As noticed above, ultimately, in compliance with this court’s order dated July 31, 1978, the abovesaid questions have been referred to this court for an answer and reply.
5. Mr. Divatia, learned counsel who appears on behalf of the assessee, has contended that the view taken by the Tribunal is erroneous and that the Tribunal ought to have come to the conclusion that there was a reasonable cause existing for the delay in filing the returns for the abovesaid two years under consideration. According to Mr. Divatia, the Tribunal was required to take into consideration that the only income of the assessee was his income from the share of the profits of the partnership business, and that the firms had filed their returns quite late. It is also the contention raided by Mr. Divatia that the delay was required to be accepted as a reasonably caused delay because the assessee had filed the returns after the filing of the returns by the abovesaid two firms. Mr. Divatia has also urged that the income of the firms was below the taxable limit and that the income of the assessee was also nominal. It is on this basis that Mr. Divatia has urged that the questions referred to us should be answered and replied in favour of assessee and against the Revenue. Anyhow, Mr. Thakore, learned counsel who appears for the Revenue, has urged that the assessee was required to make out a reasonable cause for not filing the returns within time and that no good cause has been shown, much less established by the assessee before the Tribunal and the taxing authorities below and, therefore, the questions referred to us should be answered in favour of the Revenue.
6. The facts and circumstances under which the statement of the case came to be made to this court would go to show that the return of income for the assessment year 1967-68 was required to be filed on or before August 15, 1967, while for the assessment year 1968-69, the return of income was required to be filed on or before June 30, 1968. The Income-tax Officer concerned had issued notices for both the abovesaid years under section 148 of the Act and they were duly served upon the assessee on September 17, 1970. Anyhow, the assessee had filed returns of his income for both the abovesaid years on March 31, 1971. The abovesaid are the undisputed facts on the basis of which the above said questions are required to be answered. Mr. Divatia has drawn our attention to the explanation submitted by the assessee for not filing the returns in time. The said explanation is in the form of a letter dated March 25, 1974, addressed to the Income-tax Officer, saying that the assessee has no income except his share from the two firms as indicated earlier, and that, as he did not get his share of profits, he could not file his return of income within the prescribed time. It is further stated that, for the very same reason, he could not file an estimate of his total income and also could not pay the advance tax in time. Ultimately, it is submitted that he was prevented by a reasonable cause from filing returns of income along with the estimate of the total income within time. Mr. Divatia, while placing heavy reliance upon the abovesaid letter, has urged that the assessee had urged before the Income-tax Officer that he was prevented by reasonable cause from filing the returns during the stipulated statutory limit. But, it requires to be appreciated that what the assessee has said in the abovesaid letter is that, as he did not get his share of profit, he could not file the return of income within the prescribed time limit. It shall have to be pertinently appreciated that, excepting the abovesaid broad statement, the assessee has not assigned any other reason for the delay which were sought to be propounded by Mr. Divatia before us to which we shall make a reference at a later juncture. When the appeals were being heard by the Appellate Assistant Commissioner also, the abovesaid contentions were not raided in detail. This becomes evident from the orders rendered by the Appellate Assistant Commissioner in the abovesaid two appeals dated November 26, 1975, and especially from para 5 of the same. It has been pointed out by the Appellate Assistant Commissioner that the assessee was not able to establish by any evidence that the delay on his part was only consequential to the delay committed by the firms concerned. While appreciating this question, the Tribunal has noticed that the contention of the assessee was that the only source of his income was the share income from the two firms in which the assessee was a partner. Both the firms had filed their returns for the relevant years late and, therefore, it was sought to be contended on behalf of the assessee that the returns of his income also came to be filed late. While examining this contention, the Tribunal has noticed that the only explanation which the assessee had given is that the returns came to be filed late because the firms in which the assessee was a partner filed their returns for the years under appeal late. The Tribunal, after examining the dates on which the returns in respect of the incomes of the firms and of the assessee came to be filed, noticed that there was no reasonable cause for filing the return late in the case of the assessee. The Tribunal has noticed that there is no evidence on record to show that the books of account of the firms were not ready or that the assessee’s share income from the firm was not worked out in time. Therefore, it is evident that, while examining the question regarding reasonable cause for filing the returns late, the Tribunal has noticed that nothing was brought before the Tribunal with a view to show that the facts and circumstances of the case would constitute a reasonable cause for filing the returns late in respect of the assessee also. The abovesaid position which obtained from the orders of the Tribunal would go to show that, even before the Tribunal, the contention urged on behalf of the assessee was limited to the extent of saying that the assessee could not file his returns because he did not get his share of profit from the partnership firms. Precisely, therefore, the Tribunal has come to the conclusion that the abovesaid contention which can be said to be factual contention would not constitute a reasonable cause for filing the returns late. It appears that, on the facts and circumstances of the case, no other view is possible. We are, therefore, inclined to say that the view taken by the Tribunal in this respect is a justifiable one.
7. The contention raised by the assessee through the learned advocate, Mr. Divatia, proceeds on the footing that, if the assessee was a partner in two firms as indicated above, and if his income was the income from the share of the abovesaid partnership business only, then his not getting his share from the partnership business itself would constitute a ground for coming to the conclusion that there was a sufficient cause for not submitting the return in time. The abovesaid contention raised by Mr. Divatia can be conveniently divided into two limbs. The first limb of the contention is that the abovesaid aspect of not receiving the share from partnership firms would be a relevant consideration. The second limb of the argument is that the said aspect should be taken as a decisive factor in coming to the conclusion that the assessee was prevented by sufficient cause from not filing return within the stipulated time limit. There is no difficulty on our part in accepting the first part of the contention raised by Mr. Divatia. Anyhow, so far as the second limb of the contention raised by Mr. Divatia is concerned, we should point out that the same cannot be accepted even on the basis of certain decisions pressed into service by Mr. Divatia. Heavy reliance was placed by Mr. Divatia on the Delhi High Court decision in Madan Lamba v. CIT [1983] 139 ITR 849. The facts in the said decision before us because there also the assessee had claimed that he could not file his returns of income within time as his share of profits from the firm had not been properly determined and intimated to him earlier. The Bench decision has said that the question whether a partner of a firm had reasonable cause for not filing his return of income within time because there was delay in the firm’s case is to be decided in each case on a consideration of all the relevant circumstances. It is also pointed out that all that was required to be seen is whether there was a reasonable cause for the default or delay in the filing of the return. It is also pointed out that the abovesaid consideration, namely, that the share of the income from partnership business was not determined and intimated earlier would no doubt be a relevant consideration. Anyhow, it has been pointed out very clearly that though the abovesaid consideration as pointed out in the cases while deciding a similar question. It is, therefore, clear that the said decision, on which learned counsel Mr. Divatia has placed reliance, does not go to the extent of laying down a principle that the non-receipt by the assessee of his share of income from the partnership business should be accepted as a conclusive factor to warrant a conclusion that there was a reasonable explanation for the delay in filing the return in respect of his own income. The aforesaid decision in our view goes only up to the extent of saying that it would be a relevant consideration. Anyhow, the abovesaid relevant consideration shall have to be taken into consideration along with the facts and circumstances of each case. According to us, the same would be the position emerging out of one unreported decision of this court on which Mr. Divatia has placed reliance, namely, ITR No. 156 of 1974 decided on 28/19-1-1976. The Bench of the court speaking through P. D. Desai J., while narrating the facts, has stated that, in that case, the assessee was carrying on business as sole proprietor at a village Vansjalia under Jamnagar District. The assessee was also a partner in three other firms which carried on business at Porbundar. The question which was referred to this court in the aforementioned decision is almost identical and similar. Though, on the facts and circumstances of the case, it was held that the assessee was prevented from filing his return late because of a reasonable cause, the observations made by the Division Bench would not assist Mr. Divatia in making out a case while urging before us that the abovesaid factor would be a conclusive and decisive factor. The Bench decision proceeds to say thus :
“In all cases, irrespective of whether there is income from other sources and whether the assessee was vigilant and whether his overall conduct on the part of the firm to make up its accounts in time, would not, by itself and without more, provide to the assessee reasonable cause for not furnishing the return within the time allowed. In other words, it cannot be laid down as an absolute proposition of law that in all cases, where there is a default on the part of an assessee in respect of filing his return of income on account of the fact that the firm in which he was a partner had not made up its accounts, there is per se a reasonable cause absolving him from the liability for penalty. That circumstance, though relevant, is not decisive and it will have to be weighed along with other attendant circumstances and given its due weight in the facts of each case”.
8. The abovesaid observations made by the Bench decision would clearly go to show that the circumstance that there was failure on the part of the firm to make up its accounts in time would not, by itself and without more, provide to the assessee reasonable cause for not furnishing the return within the time allowed. Moreover, the abovesaid circumstance though relevant is not decisive and it will have to be weighed along with other attendant circumstances and given its due weight in the facts of each case. Therefore, as indicated by us earlier, this decision also does not go to lay down a principle of law that the abovesaid circumstance only would be a decisive factor in deciding the similar question. This decision also would not support the contention which is being raised by learned counsel, Mr. Divatia, before us.
9. Mr. Divatia has drawn our attention to the Mysore High Court decision in Venkateswara Power Rolling Mills v. CIT [1974] 97 ITR 168. In that case also, the partner, S. V. Raju, had no separate income apart from his share of the income from the assessee firm. It was noticed by this Bench decision that the audit of the accounts for the relevant year was not completed till the end of November, 1964, and, therefore, the firm could not file its return earlier. Another reason was that the notice issued under section 139(2) was found to be illegal. Both the reasons were not accepted by the Tribunal. The question, therefore, was as to whether or not there was sufficient cause for not filing the return in time and it was pointed out that the abovesaid question is essentially a question of fact and not one of law. This decision also, therefore, does not proceed further to lay down that the abovesaid aspect as urged by Mr. Divatia would be the only relevant consideration, and, therefore, should be accepted as a decisive factor. One more decision of the Mysore High Court in N. Seenappa v. ITO [1974] 97 ITR 528 also, in our view, would not support the contention raised by Mr. Divatia before us. It was a question in respect of the interest levied by the Income-tax Officer while exercising his powers under section 139(1), (4) of the Income-tax Act, 1961. The facts and the question therein being entirely different, in our view, the abovesaid Mysore High Court decision will not render any assistance to Mr. Divatia while urging the aforementioned contention before us. The Orissa High Court decision in CIT v. Baijnath Chopolia [1976] 102 ITR 551, has been decided on the facts of that case. It is indeed true that the delay was caused because the assessee’s only income was the share of profit from the firm and that the firm could not finalise its accounts earlier, making it impossible for the assessee to ascertain his correct income. The facts appear to be rather similar, but this decision also does not go to the extent of saying that the abovesaid reason by itself would be a decisive factor. Moreover, in our opinion, the question is duly covered by the unreported decision of this court in ITR No. 156 of 1974, to which we have made a reference at an earlier juncture. It is settled by now by this decision that the circumstance that there was a failure on the part of the firm to make up its accounts in time would not by itself and without any more provide to the assessee reasonable cause for not furnishing the return within the time allowed under the provisions of the Act of 1961. On a careful consideration of the abovesaid decision rendered by this court and also of the other judgments on which Mr. Divatia has placed reliance, we are not inclined to take a contrary or a different view. In view of this, it shall have to be held that merely because the assessee could not get his share from the income of the partnership business that by itself would not constitute a sufficient cause for not filing his return in time. The recent Supreme Court decision in Addl. CIT v. I. M. Patel and Co. [1992] 196 ITR 297 also merits consideration. The argument of learned counsel appearing before the Supreme Court proceeded on the basis of the distinction between levy of penalty under section 271(1)(a) as opposed to section 271(1)(c) of the Act. The question was, no doubt, in respect of discharge of the burden for showing the reasonable cause. After consideration of the rival contentions, the Supreme Court had taken the view that the Revenue was entitled to succeed on the facts and circumstances of the case. This decision also does not go to the length of saying that the non-availability of the share of the income from the partnership business would constitute a sufficient cause. We shall have to make a reference to this decision once again from a slightly different angle, but it would suffice to notice at this juncture that in this decision also, the position is not brought to that broad extent as indicated by Mr. Divatia.
10. Moreover, when this question is being examined as a question of fact, it should not escape our notice that the contention raised by the assessee by the letter dated March 25, 1974, was only to the effect that he had not got his share of profit from the partnership business income and, that, therefore, he has not filed his return in time. Excepting the abovesaid, the assessee has not said a word further. The Tribunal has rightly noticed that the above was the only explanation which the assessee had assigned. According to the Tribunal, there was no evidence on record to show that the books of account of the firm were not ready or that the assessee’s share income from the firm was not worked out in time. Looking to these facts, it shall have to be accepted on the basis of the principle laid down by this court in an unreported decision in ITR No. 156 of 1974 that though the abovesaid contention would be a relevant consideration, only on the basis of the same it cannot be accepted that it would constitute a sufficient cause for not filing the return in time.
11. Looking to what has been stated by us earlier, questions Nos. 1, 3 and 4 shall have to be decided and answered in the negative, against the assessee and in favour of the Revenue.
12. So far as question No. 2 referred to us is concerned, it requires to be pointed that it relates to the question regarding the initial burden on the Department. The question which had cropped up before the Tribunal and the taxing authority below was as to whether the initial burden which was on the Department was discharged or not. The position in this respect is now well-settled by the Supreme Court decision in Addl. CIT v. I. M. Patel and Co. [1992] 196 ITR 297. Though the question was slightly different, the principle laid down is that it is for the assessee, who is required to file a return within a particular time, to show the reasonable cause for the delay committed in filing the return. This decision in fact takes away the principle of initial burden which was thus far taken to be on the shoulders of the Department. In view of this Supreme Court decision in this respect, the question appears to be redundant. Anyhow, we would like to answer this question by saying that, now, there is nothing like the discharge of initial burden on the shoulders of the Department.
13. We, therefore, answer and reply the abovesaid questions accordingly with no order as to costs.