MESSRS VOGUE CARPETS LTD. Versus INCOME-TAX OFFICER

ORDER

MUHAMMAD MAZHAR ALI (CHAIRMAN) .‑‑This appeal, at the instance of assessee, has been brought against the order of the Commissioner of Income‑tax (Appeals), Zone,

1. Karachi, whereby he has declined to interfere with the impugned order of the Income‑tax Officer levying a penalty of Rs.500 under section 28(1)(a) (i) of the repealed Income‑tax Act, 1922 (shortly stated hereafter "the Act"). The admitted facts as stated at the bar and are borne out from the record are these. The last date for filing the return for the year under appeal, that is, 1977‑78, was 15th August, 1977. The assessee made an application, dated 13th August, 1977 to the Income‑tax Officer for extension of time to file return on the ground that the books of accounts were under audit The application was duly supported by a certificate of Messrs Feroz sharif a Co., Chartered Accountants. The Income‑tax Officer rejected the assessee's request vide Intimation Slip, dated 16‑8‑1977, which was served upon the appellant, through its Authorised Representative on 20th August, 1977. The assesses, instead of filing the return, made an application for extension of time to file the return to the Inspecting Assistant Commissioner, Range 4, Central Zone 'B', Karachi, on 21,st August, 1977. The Inspecting Assistant Commissioner declined to accede to the request of assessee and intimated it accordingly vide his letter, dated 23rd August, 1977, which was served on the appellant's Authorised Representative on 27th August, 1977. Even then the assesses did hot file the return. He approached the Commissioner of Income‑tax, Central Zone 'B', Karachi on 28th August, 1977 with the same request. It however, filed the return d income on 31st August, 1977 with Income‑tax Officer, Companies Circle 3, Karachi, alongwith duly audited balance‑sheet. It is pertinent to note that the jurisdiction of the assessee case with the income‑tax officer, Companies Circle B‑R, Karachi, and it was he to whom the application for extension of time was presented, on 15‑8‑1077. We may pause here .a little to state that the counsel for the appellant, on our enquiry, could not give any explanation as to what led the assessee to file return with the Income‑tax Officer Companies Circle 3. It is, however, borne out from the record that the said return was received by transfer by the concerned Income‑tax 'Officer, Companies Circle B‑8, on 5‑10‑1977. However, in the meanwhile, the Income‑tax Officer, Companies Circle B‑8 had issued a notice under section 21(3), which was served upon the assessee on 21st August, 1977. The assessee submitted its explanation on 25th August, 1977 which the Income‑tax Officer repelled as being unsatisfactory and levied the penalty as stated above. The assessee's appeal to the Commissioner of Income‑tax (Appeals) also failed. Hence this appeal to the Tribunal.

2. We have heard the representatives of both the parties. The counsel for the appellant, relying upon the decision of the Tribunal, reported as (1965) 11 Tax 39 (Trib.), vehemently urged that since the account were under audit, the assesses had a reasonable cause to apply for extension of time for filing the return and that the Income-tax Officer acted arbitrarily and without justification in' not according to its request. The counsel further submitted that the return was actually filed on the, basis of duly audited books of accounts on 27‑E‑1977, that is, within 12 days of the last date for the filing of return. The learned Departmental Representative, on the other hand, supported the impugned order. In his submission there was no justification for the assessee for not filing the return of income as per books of accounts. He emphasised that if upon completion of the audit it was found necessary to revise the return of income, it could legally do so at any time before the completion of assessment in terms of section 22(3) of the Act.

3. We have given due consideration to the submissions made at the Bar. There is no denying the fact that the assesses did not deliver the return under section 22 of the repealed Act, 1922 within appointed time. Therefore, the only question that calls for determination is as to whether or not the assessee was prevented by a sufficient cause to furnish the return by the prescribed date viz. 15th August, 1977?

4. It depends upon the circumstances of each individual case as to whether the default in filing the return within the given time was for) sufficient cause or otherwise. What constitute a sufficient cause within the meaning of the first proviso to subsection (IA) of section 23 of the, Act is purely a question of fact. Let us first refer to the relevant provisions of law. By virtue of subsection (1) of section 22 of the Act every person whose total income during the previous year exceeding the maximum amount which is not chargeable to tax and every person, whatever his income in the previous years, was assessed to tax for any year within five years preceding that year, is legally obliged to furnish a return setting forth his total income and total world income during the previous year. Under subsection (I‑A) of section 22 a time limit has been prescribed for submission of return referred to in subsection (1). in the case of companies as well as in other cases; it is thus, followed by a proviso which lays down that, the Income‑tax Officer may on sufficient cause being shown, extend the date for the delivery of the return in the case of any person or class of persons. Under section 28(1) of the Act the Income‑tax Officer has been vested with the power to levy penalty where a person has without reasonable, cause failed to furnish the return, to the extent of five thousand rupees and in the case of continued default a further sum not exceeding one hundred rupees for every day during which the default continues.

5. From a bare perusal of the above‑referred provisions of law it is manifestly clear that the Legislature in its own wisdom has trot made it compulsory for the companies, duly registered under the Companies Act to file the return‑ of income on the basis of audited account, The companies like all other assessee have to file the return before the expiry of the appointed date. The appellant, it is also evident from the facts of the case, was fully conscious of its statutory obligation. It was because of it that a request was made to the Income‑tax Officer before the expiry of the last date of submission of return for enlargement of time for filing the return on the ground that its account being audited. The Income‑tax Officer immediately declined toy accede to its request and desired it to file the return. It is from this', stage onward that the assessee, in our opinion, adopted an attitudes which could not but be held to be deliberately contumacious. He further acted unreasonably in wilfully defying even the order of the Inspecting Assistant Commissioner. In our opinion, it was not proper on the part of the assesses not to file the return immediately on receipt of the orders of the Income‑tax Officer and the Inspecting Assistant Commissioner. We are clearly of the view that the Income‑tax Officer has exercised his discretion judiciously in imposing the penalty and no legitimate objection can be taken thereto. It did not obviously tantamounts to a venial or trivial breach of the provision of law. On the contrary, upon the facts of the instant case, there is no escape from the conclusion that the assesses deliberately and without any reasonable cause failed to file the return on the basis of the unaudited accounts, which it could have conveniently done without exposing itself to any irreparable loss or damage. After all the Legislature has devisedly enacted in subsection (3) of section 22 of the Act that an assesses can revise a return at any time bef9re the making of the assessment. Every case is to be judged in the context of its own facts. If we were to accept the contention of the assesses that the non‑filing of return within the statutory period could in all cases be justified on the plea of non availability of audited accounts, then it would tantamount to laying down the law contrary to what the Legislature has expressly enacted.

6. For the foregoing reasons we hold that the assessee's failure to file the return within time was not any sufficient cause and hence the Income‑tax Officer acted well within his competence to levy penalty. The amount of penalty is also reasonable and hence we do not find any justification to interfere with the order of the Income‑tax Officer. Consequently, the appeal fails and is hereby dismissed.

M. Y. H. Appeal dismissed.