Law: Income Tax Act, 1961

Section: 256

(a) Income tax---Penalty Penalty for failure to furnish estimate of advance tax without reasonable cause Reasonable cause Burden of proof¬Nature and extent. The burden of proving reasonable cause lies upon the assessee. If the reasonable cause assigned by the assessee is accepted, no further question arises, but if the reasonable cause assigned by the assessee is not accepted, then, it becomes open to the Income tax Officer to levy a penalty. It cannot be said that in a case where the assessee's explanation is rejected, the department must go further and prove that failure to furnish the estimate or return is deliberate or wilful. However, mere rejection of the explanation is not enough; the Income tax Officer must record a finding that there was no reasonable cause for not tiling the estimate, then alone, he gets the power to impose penalty. Even there, the Income tax Officer has to exercise his discretion and determine, having regard to the facts and circumstances of the case, including the conduct of the assessee, whether penalty should be levied and if so, in what measure. In such a case, there is no question of any other or further burden of proof lying upon the department. (b) Income tax Advance tax Failure to furnish estimate of advance tax without reasonable cause Existence or absence of reasonable cause Is a question of fact. (c) Income tax Reference to High Court Interference with finding of fact¬-Scope. In a reference, the High Court cannot interfere with the finding of fact of the Tribunal unless it is shown that it is perverse or that there is no evidence to sustain it. 1981 T L R 1080 ; 134 I T R 609 (Cal.); (1977) 110 I T R 411 (Guj) ; (1975) 98 I T R 343 (Punj & Har) ; (1975) 100 I T R 329 (Pb. & Har.) ; 1973 T L R 869 ; (1975) 101 I T R 368 (All.) ; A I R 1970 S C 253 ; (1972) 831 TR26;AIR1970SC 1782:(1970)761 ITR 696; (1961) 431 ITR 432 ahd (1960) 1 K L R 505 ref. JUDGMENT JEEVAN REDDY, J. Two questions are referred to us in pursuance of a direction by this Court under section 256(2) of the Income tax Act. They are : (1) Whether the order of the Appellate Tribunal holding that reasonable cause is made out for not furnishing the…

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