The Commissioner Of Income-Tax, Patiala v. Pure Drinks (New Delhi) Ltd

HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** ITR No.279-282 of 1995 (O&M) Date of Decision: 03.07.2014 **** The Commissioner of Income-tax, Patiala . . . . Appellant VS. Pure Drinks (New Delhi) Ltd. . . . . Respondent **** CORAM: HON’BLE MR.JUSTICE SURYA KANT HON’BLE MRS.JUSTICE LISA GILL **** Present: Mr. Vivek Sethi, Advocate for the appellant Mr. Alok Mittal, Advocate for the respondent **** .SURYA KANT, J (1)The Income-Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (in short, ‘the Tribunal’) has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (in short, ‘the Act’) for the opinion of this Court:- “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the penalty levied under Section 140A(3) of the Act, for the period from 1-11-1984 onwards on the basis of assessee’s letter dated 22/25-3-1985 being an extraneous piece of evidence in proceedings under section 140A(1) of the Income-tax Act, 1961?” (2)The material facts as emerging from the Statement of the Case may be briefly noticed. (3)The Assessee-Company deals in soft drinks. It filed return for the Assessment Year 1982-1983 on 15.01.1983 declaring income at �1,03,71,037/-. The return for the Assessment Year 1983-84 was filed on 20.01.1984 showing the income at �2,22,68,800/-. The Assessee nevertheless did not pay the Self-Assessment Tax. Penalty proceedings were thus initiated under Section 140A(3) of the Act. The petitioner before furnishing the returns of income for both the Assessment Years gave its explanation for not paying the tax. The Inspecting Asstt. Commissioner of Income-tax after considering that explanation imposed penalty on the Assessee amounting to �15,63,458/- and �39,12,554/- for the Assessment Years 1982-83, 1983-84, respectively vide orders dated 27.05.1985. (4)The Assessee’s appeal(s) against imposition of penalties were also dismissed by the Commissioner of Income-Tax (Appeals). (5)The Assessee, however, succeeded in part in its second appeal(s) before the Tribunal who, by way of a consolidated order dated 04.11.1987 cancelled the penalty for the period from 01.11.1984 onwards for both the Assessment Years. (6)Both the Assessee and the Revenue filed two Reference Applications each before the Tribunal under Section 253(1) of the Act which were heard together. While the Assessee suggested five questions of law, the Revenue suggested two such questions for being referred to this Court. Since there was difference of opinion between the Judicial Member and the Accountant Member of the Tribunal with regard to the questions of law to be referred to this Court, the matter was referred under Section 265(4) of the Act and as per the majority opinion, the question of law as mentioned in para (1) of this order, has been referred for the opinion of this Court. (7)We have heard Sh. Vivek Sethi, learned counsel for the Revenue and Sh. Alok Mittal, learned counsel for the Assessee. (8)Learned counsel for the Revenue submits that the Appellate Tribunal ought not to have relied upon the contents of Assessee’s letter dated 22/25.03.1985 which was, for the first time, relied upon by it before the Tribunal and was never pleaded either before the Assessing Officer or the Commissioner, Income Tax (Appeals). He, thus, urges that since the Appellate Tribunal has relied upon an extraneous piece of evidence which could not be taken on record at the stage of second appeal, the cancellation of penalty for the period commencing from 01.11.1984 by the Appellate Tribunal is wholly unjustified. (7)We have heard Sh. Vivek Sethi, learned counsel for the Revenue and Sh. Alok Mittal, learned counsel for the Assessee. (8)Learned counsel for the Revenue submits that the Appellate Tribunal ought not to have relied upon the contents of Assessee’s letter dated 22/25.03.1985 which was, for the first time, relied upon by it before the Tribunal and was never pleaded either before the Assessing Officer or the Commissioner, Income Tax (Appeals). He, thus, urges that since the Appellate Tribunal has relied upon an extraneous piece of evidence which could not be taken on record at the stage of second appeal, the cancellation of penalty for the period commencing from 01.11.1984 by the Appellate Tribunal is wholly unjustified. (9)Per contra learned counsel for the Assessee submits that the Appellate Tribunal was conscious of the fact that the letter dated 22/25.03.1985 of the Assessee pertained to payment of Self-Assessment Tax under Section 140(A) in instalments or that the said letter was not pleaded before the Assessing Officer and the CIT (Appeal). The Tribunal has nonetheless relied upon that letter for the limited purpose that there existed a reasonable cause as the factory of the Assessee situated at Najafgarh Road and Okhla Industrial Area, New Delhi was substantially destroyed on 01.11.1984 by a mob who forced their entry into the premises and started burning and damaging the trucks parked inside the factory and set on fire the office furniture and properties of the factories. It was taking notice of the extensive loss suffered by the Company that the continuous imposition of penalty w.e.f. 01.11.1984 onwards was cancelled by the Tribunal. Learned counsel urges that the ‘reasonable cause’ for delayed deposit of the Self-Assessment Tax is a pure question of fact and which does not give rise to any question of law worth opinion of this Court. (10)On consideration of the rival submissions, we are of the view that the Appellate Tribunal took notice of some unfortunate events that happened in the factory premises of the Assessee on 01.11.1984 and consequently cancelled imposition of penalty from that date onwards. The Assessee has been given benefit of doubt of the circumstances pleaded by it in the letter dated 22/25.03.1985 which were apparently not disputed by the Revenue also. The part acceptance of the explanation of Assessee is a pure finding of fact and it does not give rise to any question of law. In a catena of decisions, it has been ruled that the question whether there is any reasonable cause for delayed filing of the Return or non-payment of Self-Assessment Tax is essentially a pure question of fact and not of law. [Ref. (i) Commissioner of Income Tax vs. Vidya Sagar[1975] 100 ITR 281 (P&H); (ii) Commissioner of Income Tax, Patiala-II vs. RB Jodhamal Bishan Lal Kuthiala [1975] 100 ITR 336 (P&H); (iii) Addl. Commissioner of Income Tax, Delhi-II vs. Free Wheels India Ltd., [1982] 137 ITR 378 (Delhi); (iv) Commissioner of Income Tax vs. Mrs. Kaija Karina Toor, [2010] 323 ITR 233 (P&H)]. (11)The reasons assigned by the Appellate Tribunal for cancellation of penalty from 01.11.1984 onwards being a finding of fact only without any legal intricacies, it is held that the question referred for the opinion of this Court is not a question of law. (12)Accordingly, we return these References unanswered. ������������������������� ������������������� ������������������