Law:

Section:

Section 256 of the Income-tax Act 1961 [Corresponding to section 66(2) of the Indian Income-tax Act, 1922] - High Court - Reference to - Assessment year 1960-61 - Tribunal deleted penalty imposed upon assessee under section 271(1)(a) holding that, in transaction period before 1961 Act came into force with effect from 1-4-1962, departmental practice was not to impose any penalty if return, though delayed, was filed before end of relevant assessment year - Whether question of existence or otherwise of a reasonable cause for late filing of return in instant case, being a pure question of fact, could not be directed to be referred under section 66(2) - Held, yes FACTS The assessee-firm was subjected to penalty for late filing of the return. On appeal, the AAC reduced the penalty. On further appeal, the Tribunal, set aside entire penalty on the ground that in the transition period, before the 1961 Act came into force from 1-4-1962, the departmental practice was not to impose any penalty if the assessee filed its return, although delayed, before the end of the assessment year. The reference : HELD The Tribunal took judicial notice of the departmental practice prevailing prior to the coming into force of the Act. That departmental practice might have been against the specific provisions of the 1922 Act, but that is neither here nor there. The question will be whether as required by section 271(1)(a) of 1961 Act, there was reasonable cause or that the assessee failed to furnish the return without a reasonable cause. For determining the reasonable cause, it was open to the Tribunal to take notice of a departmental practice which might not have been strictly in accordance with the provisions of 1922 Act. As such, the question was not a question of law which should be called upon to answer by requiring the Tribunal to refer it. As regards the question relating to deletion of penalty, the requirement of section 271(1)(a) is that penalty is imposable where an assessee fails to file a return without a reasonable cause. Under the 1922 Act, a general notice used to be given or sometimes even individual notices used to be served by the income-tax authorities. But there can be…

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