Law:

Section:

Section 271(1)(a), read with section 256 of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1967-68 - Assessee made delay in filing return under section 139(1) - Income disclosed was below minimum taxable limit and interest paid to partners was not added in that income - ITO added that amount of interest in income disclosed and levied penalty under section 271(1)(a) which was upheld by AAC - Before Tribunal, assessee contended that amounts represented borrowings from outsiders and interest paid thereon was not includible in assessee's total income, but Tribunal rejected said plea of assessee ground that said plea was not raised before ITO or AAC - Whether question as to whether there was a borrowing from outsiders or not was a pure question of fact and whether in absence of any borrowing, assessee could still entertain a belief that its income was less than minimum taxable limit, was also a question of fact - Held, yes - Whether, since Tribunal had decided aforesaid matter on basis of findings of fact arrived at by it and assessee had not put any contention to contest aforesaid findings of fact arrived at by Tribunal, no questions of law arose from its order - Held, yes FACTS The assessee made delay in filing the return under section 139(1) for the relevant assessment year. It disclosed its income which was below the minimum taxable limit but interest paid to partners was not added. The ITO viewed that if this amount of interest was added back, then the income of the firm was above the taxable limit and the firm was duty bound to file its return under sub-section (1). The ITO, therefore, added back the amount in the total income while making the assessment and also gave a notice under section 271(1)(a). The assessee did not file any reply. The ITO felt satisfied that the assessee was not prevented by sufficient cause from furnishing the return of his income within the time permissible under the law and, therefore, imposed a penalty under section 271(1)(a). This penalty was upheld by the AAC. The Tribunal held that the assessee never advanced the plea that the amount in respect of which the interest was paid to the partners was…

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