COMMISSIONER OF INCOME TAX vs J. L. TRIVEDI and SONS.

G. T. NANAVATI J. :

This application is filed by the CIT under s. 256(2) of the IT Act, as the Tribunal rejected the application made under s. 256(1) for referring the question which, according to the CIT, arose out of the Tribunals order.

J. L. Trivedi & Sons is the assessee. It is a registered firm. It came into existence in or about 1970-71. It consisted of three parties, viz., Jashwantlal Kantilal Trivedi, Shantaben Jayantilal Trivedi and Naisedh Jayantilal Trivedi. The share of Shantaben, the mother was 45%, Naisedh had 50% share and the share of Jashwantlal was 5% and was admittedly an outsider in the sense that he did not belong to the family of Jayantilal Trivedi. The affairs of the firm were controlled and managed by Shantaben and Naisedh and Jashwantlal was working under their control and guidance. In the year 1971-72, Pallavika, daughter of Shantaben eloped with Chandrakant Shankerlal Rana and could be traced and brought back to the family with great efforts and pain. She was then married to Bharatkumar Ratilal Pandya in December, 1972. But her relations with Bharatkumar were never cordial and again in January, 1981, she eloped with Chandrakant Rana. She was brought back in July 1981 and finally, her relationship with her husband got terminated in February,1982 by a decree of divorce. All these reasons were put forward by the assessee while explaining the delay in filing the IT returns filed for the asst. yrs. 1971-72 to 1976-77. In this application, we are concerned with the asst. yr. 1977-78. The due date for filing the IT return for that period. However, we are not concerned now with the returns was 30th June, 1977 but it was actually filed on 17th February, 1982. The ITO did not consider the reasons put forward by the assessee as reasonable and sufficient cause for filing the return late by 55 months. He, therefore, imposed penalty for that period. Aggrieved by that order, the assessee preferred an appeal to the CIT(A). The CIT did not accept the explanation given by the assessee as reasonable and sufficient but considering the fact that the assessee had asked for extension upto 31st December, 1977 and that it was granted, held that the delay was not of 55 months but of 36 months. Aggrieved by that order, the assessee preferred an appeal to the Tribunal. The Tribunal was of the view that elopement of Pallavika must have affected the clam and peace of her brother and the mother who were partners of the assessee-firm, but the said effect appears to have vanished by 31st December, 1975. The Tribunal after taking note of the fact that the return for the asst. yr. 1976-77 was filed on 12th February, 1980 though it was due on 30th June, 1976 and that there was no reason for condoning delay in filing the return for that year after 1st January, 1977 and that for the period of 37 months, appropriate penalty was imposed upon the assessee, observed as under as regards the delay in filing the return for the asst. yr. 1977-78 :

"Before we proceed to appreciate the merits of assessees case we would like to point out another material factor which we indicated in Court in the course of hearing these appeals and which has been consistently followed by the Benches of the Tribunal at Ahmedabad. That factor is with regard to the overlapping period of delay in the filing of returns for two or more than two years. The Tribunal is of the view that it is the cardinal principle of criminal jurisprudence of which the penalties under the Act being of quasi criminal character, are a specie, that a person cannot be punished twice for the commission of the same offence or default in the nature of an offence. This doctrine is enshrined in Art. 20 of the Constitution of India and is embodied in s. 403 of the CrPC, 1973. Following that doctrine the Tribunal has consistently taken the view in a number of cases relating to imposition of penalties that for the same period of default committed in filing returns, which may be relevant to two or more than two assessment years and which no doubt is a continuing offence, should be punished only once and not twice or thrice, as the case may be. In this behalf, the opinion of the Tribunal has been that in the cases of firms maintaining accounts, filing of return generally depends upon completion of accounts. If accounts for a particular year were not completed or finalised and for that reason the return of income for that year could not be filed, return of subsequent year could not be expected to have been filed. Therefore, if the delay committed in filing the return of the earlier year is condoned or punished the same delay should not be punished in subsequent year. Since the benefit of condonation of delay or to speak in other words of "Autro fis acquitta" in the earlier year would be available in the subsequent year the benefit against the rule of double jeopardy should equally be available to the assessee in subsequent year/s."

Appreciating the facts on the basis of the material before it and following the principle quoted above, the Tribunal held that :

".... delay upto 12th February, 1980 has been punished in the case for asst. yr. 1976-77 and delay from 1st January, 1981 to 31st January, 1982 has been held by us as having been satisfactorily explained. That leaves the unexplained delay for the period from 1st March, 1980 to 31st December, 1980, i.e., for 10 months. Penalty for 10 moths is thus imposable for this year".

Thus, the appeal filed by the assessee was partly allowed and the penalty for ten months, i.e., from 1st March, 1980 to 31st December, 1980 was confirmed. The Tribunal cancelled the penalty for rest of the period. The CIT feeling aggrieved by that order, applied to the Tribunal under s. 256(1) to refer the following question to this Court.

"Whether the Tribunal is right in law and on facts in confirming penalty for ten months only and cancelling the penalty levied for the rest of the period as calculated by the ITO ?

The Tribunal rejected the application holding that the entire delay in filing the return was satisfactorily explained and that whether there was any reasonable cause for delay or not was essentially a question of fact and since it has decided the question on appreciation of the material on record, no referable question of law arose out of its order.

What is urged by the learned counsel for the Revenue is that the Tribunal misdirected itself in law when it held that "if the delay committed in filing the return of the earlier year is condoned or punished the same delay should not be punished in subsequent year". He submitted that neither the doctrine of double jeopardy contained in Art. 20 of the Constitution of India nor s. 403 of the CrPC, 1973 can have any application to the assessment proceedings. He also submitted that not filing IT return for each year in time is a separate default by itself and merely because such default can be regarded is a continuing default in the sense that it can be punished till it continues, for that reason, series of defaults cannot be regarded as one default only and that the assessee should be punished for each default even though period of default may overlap.

In our opinion, there is much substance in this contention raised on behalf of the Revenue. Art. 20(2) can be invoked, if the following conditions are satisfied :

There must be a pervious prosecution.

The accused must have been punished at such prosecution.

The subsequent prosecution must also be one for the prosecution and punishment of the accused.

The prosecution on both the actions must be in relation to the same offence.

The default made punishable by s. 271(1)(a) cannot be equated with an offence nor the proceedings contemplated by the section can be regarded as prosecution for an offence. Though s. 271 provides for payment of fine, by way of penalty, it is really in the nature of civil liability and not punishment for an offence. Moreover, when a default, is committed and again a similar default is committed, thereafter, it will not be proper to invoke the principle of double jeopardy because the subsequent default cannot be said to be the same default it being an independent default committed subsequently. The Tribunal was, therefore, obviously wrong in invoking the doctrine enshrined in Art. 20 of the Constitution in this case and cancelling the penalty for the period which was overlapping.

It was next submitted that the Tribunal was also wrong in proceeding on the basis that if accounts of the firm are not completed in a particular year and for that reason, return of income for subsequent year could not be filed, then delay in filing that subsequent years return has to be condoned. It is no doubt true that non-completion of accounts of the earlier year cannot by itself be regarded as a good ground for delay in filing the return of income for the subsequent year. The reason is that non-completion of accounts for the earlier year may be because of a cause which may not be reasonable or sufficient. Non-completion of accounts for the earlier year may be intentional or because of negligence of the assessee. Obviously, such an excuse will not be regarded as a reasonable cause for delay in filing IT return for that year and if such excuse cannot be regarded as sufficient ground for that year, ordinarily, that would not be regarded as good ground for late filing of the return for the subsequent year. Just as the question whether non-completion of accounts can be a reasonable cause will have to be decided by reference to facts of each case, similarly, whether delay in filing return of income for the subsequent year because of delay in completion of accounts of the earlier year can amount to reasonable cause or not will have to be decided by reference to the facts of each case. The principle enunciated by the Tribunal insofar as it is stated in wider terms than what we have indicated above, will have to be regarded as erroneous.

So far as the facts of this case are concerned, as stated above, the return was due on 30th June, 1977. The assessee, however, applied for extension upto 31st December, 1977. The return was actually filed on 17th February, 1982. Considering the explanation given by the assessee and the fact that the IT return for the asst. yr. 1976-77 could be filed only on 12th February, 1980, the Tribunal held that the accounts not having been completed for the previous year, the assessee could not have filed the return for the asst. yr. 1977-78 till that date. Therefore, delay in filing the return will have to be counted from 1st March, 1980. The Tribunal further held that in view of the tragic event of elopement once again, there was reasonable cause for not filing the return between 1st January, 1981 and 31st January, 1982. As the return was filed on 17th February, 1982, the only period that had remained unexplained was the period from 1st March, 1980 to 31st December, 1980. It is no doubt true that as contended by the learned counsel for the Revenue, no clear finding has been recorded by the Tribunal to the effect that the assessee could file its return for the asst. yr. 1977-78 till 12th February, 1980 because the accounts for the year were not completed till 12th February, 1980. But the Tribunal, while rejecting the application filed by the Revenue under s. 256(1) has indicated that the assessee was not able to file the return till 12th February, 1980 because the accounts of the earlier year were not finalised. The following observations of the Tribunal in this behalf indicate what prompted it to hold that there was no delay till 1st March, 1980 :

"The Tribunal found that as far as asst. yr. 1977-78 was concerned, the CIT(A) had condoned delay upto 31st December, 1977 but the assessee had already penalised for delay upto 12th February, 1980 because for asst. yr. 1976-77, penalty has been fully confirmed. According to the Tribunal, the accounts of the earlier years were finalised."

Thus the reason for holding that there was sufficient cause prior to 1st March, 1980, the Tribunal relied upon this circumstances and also the circumstances of overlapping period. On the basis of the material on record, the Tribunal thus appears to have recorded the finding that the accounts for the asst. yr. 1977-78 were not completed till 12th February, 1980. It was in these circumstances that it further recorded a finding that there was reasonable cause for delay till 12th February, 1980. Again the finding that there was reasonable cause for the delay for the period from 1st January, 1981 to February, 1982, was a finding of fact recorded on the basis of the material on record and the explanation given by the assessee in that behalf. In an application made under s. 256(2) nor in a reference made under s. 256(1), this Court can reappreciate the evidence to consider whether such finding is justified or not unless a specific question was raised to that effect before the Tribunal and has been referred to this Court. In this application made under s. 256(2), no specific question as regards the propriety of that finding of fact has been raised. Therefore, we will have to accept that finding of fact and proceed on the basis that there was reasonable cause not only for the period from 1st January, 1981 to February, 1982 but also for the period beginning from 30th June, 1977 to February, 1980.

This application is, therefore, rejected. Rule is discharged. No order as to costs.