Law:

Section:

Section 271(1)(a), read with section 271(3)(b), of Income-tax Act, 1961 – Penalty – for late filing of return – Assessment year 1961-62 – ITO after making assessment, levied penalty on assessee for delayed filing of return under section 271(1)(a) – Tribunal held that assessee's income fell below taxable limit applicable to registered firm in relevant assessment year – However, since default occurred after service of notice under section 22(2) of Indian Income-tax Act, 1922, a penalty of Rs. 25 only was levied under section 271(3)(b) – Whether where assessee honestly believes that his income is not taxable and his belief is supported by decision of Tribunal, it could not be aid that assessee has not submitted his return without any reasonable cause – Held, yes – Whether, since, in instant case, finding recorded by Tribunal that assessee had a reasonable cause for not filing return was a finding of fact, no question of law arose out of order passed by Tribunal – Held, yes FACTS The ITO after making the assessment for the assessment year 1961-62, levied penalty under section 271(1)(a) for delayed filing of return. On second appeal, the Tribunal held that the assessee's income fell below the taxable limit applicable to a registered firm in the relevant assessment year. However, it was further held by Tribunal that since the default occurred after the service of notice under section 22(2) of 1922 Act, penalty of only Rs. 25 was leviable under section 271(3)(b). It also refused to refer any question of law under section 256(1). On application under section 256(2) : HELD According to section 271(1)(a ), if one has failed to furnish the return of total income without reasonable cause, then alone this sub-section is attracted. If the assessee honestly believes that his income is not taxable and his belief is supported by the decision of the Tribunal, it could not be said that the assessee has not submitted the return without any reasonable cause. In the instant case, the Tribunal viewed that the assessee had a reasonable cause for not filing the return and that finding was a finding of fact arrived at by the Tribunal. No question of law, therefore, arose. In the result,…

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