Commissioner of Income Tax vs Mrs. Kaija Karina Toor

M.M. Kumar, J.—This order shall dispose of seven appeals filed by the Revenue against the same assessee-respondent but in respect of different assessment years, namely, 1982-83 to 1988-89. All these appeals filed u/s 260A of the Income Tax Act, 1961 (for brevity "the Act") are directed against common order dated March 13, 2008, passed in I.T.A. Nos. 1034 to 1040/Chandi/2007 pertaining to the assessment years 1982-83 to 1988-89 by the Income Tax Appellate Tribunal, Chandigarh (for short "the Tribunal"). The Revenue has claimed that from the order of the Tribunal the following substantial questions of law would arise for determination of this Court:

A. Whether in the facts and circumstances of the case the Tribunal was right in deleting the penalty and in coming to the conclusion that the assessee was prevented by a reasonable cause from payment of self-assessment tax while filing the return of income?

B. Whether in the facts and circumstances of the case the assessee''s non-access to the funds in bank could be accepted as reasonable cause for non-payment of self-assessment tax u/s 140A of the Act ignoring the fact that she had not taken any positive initiative to seek payment of self-assessment tax from out of the said funds and more so because the Department had no legal authority to enforce recovery of self-assessment tax?

Whether in the facts and circumstances of the case, the Tribunal was right in law in not appreciating that the assessee''s action of objection to the Revenue''s move seeking modification in the injunction of the hon''ble High Court''s orders proved that the assessee never intended to pay self-assessment tax?

It is pertinent to mention that the predecessor in interest of the assessee-respondent had failed to file return and on his death in an accident the assessee-respondent had filed the return. Thus, the question raised by the Revenue before the Commissioner of Income Tax (Appeals) was concerning imposition of penalty u/s 140A(3) of the Act. The Commissioner of Income Tax (Appeals) recorded a finding of fact that the assessment has been completed by the Assessing Officer in respect of the legal heir of the deceased, who was a widow of more than 65 years of age and resided abroad in Canada with her children. The assessee''s accounts were under attachment by the court as also by the tax authorities later. Another finding of fact recorded is that amount under attachment in the bank with date of filing of the return was much more than the amount of tax assessed. It was later on appropriated by the Department pursuant to the directions issued by the High Court when the order of attachment was vacated and in fact a demand was raised by the Department pursuant to order u/s 143(3) of the Act. On the basis of the findings of fact, the Commissioner of Income Tax (Appeals) expressed the opinion that the year wise self-assessment tax was already recovered by the Department and the contention of the assessee was duly manifested while filing return of income with request to adjust tax as assessed out of attached bank account, therefore, it was concluded by the Commissioner of Income Tax (Appeals) that the delay in recovery of self-assessment tax cannot be imputed to assessee-legal heir. There was reasonable hardship and reasonable cause for not paying the self-assessment tax at the time of filing of return. Accordingly, the penalties u/s 140A(3) of the Act were directed to be deleted by the Commissioner of Income Tax (Appeals).

The Revenue approached the Tribunal and after hearing counsel for the parties, the Tribunal observed that the penal action contemplated by Section 140A(3) of the Act comes into operation when the assessee commits any default in making payment of tax in terms of Section 140A(1) of the Act. The Tribunal has concluded that the question of non-payment of tax on time stems from a reasonable cause or not, is necessarily a question of fact. The Tribunal proceeded to examine the question whether the finding of fact recorded by the Commissioner of Income Tax (Appeals) was based on material or not or whether such finding could be regarded as perverse. The answer given by the Tribunal to the aforesaid issue reads thus:

The conclusion of the Commissioner of Income Tax (Appeals) is that at the time when the returns of income were filed by the assessee, the bank accounts of the assessee were lying attached as per order of the court. Secondly, the Commissioner of Income Tax (Appeals) also comes to a finding that on the date of filing of the return, such bank account contained monies which were sufficient to pay the tax demand in question. Thirdly, the Commissioner of Income Tax (Appeals) has come to a finding that it is only subsequently after the hon''ble High Court was approached for vacation of the attachment that the Revenue has collected the due taxes. We find that the aforesaid factual position has been pleaded by the assessee not only before the Commissioner of Income Tax (Appeals) but also before the Assessing Officer as is evident from the perusal of the order of the Assessing Officer dated May 2, 1994, imposing penalty u/s 140A(3) of the Act. We, therefore, at the outset do not find any infirmity in the conclusion drawn by the Commissioner of Income Tax (Appeals) as it is based on material before him. Nothing to the contrary has been brought on record by the Revenue on the basis of any cogent material, which could enable us to take a different view of the fact situation. There is no material or evidence on record to substantiate the challenge of the Revenue to the conclusions drawn by the Commissioner of Income Tax (Appeals).

The only contention raised before the Tribunal was that the assessee had the opportunity to operate bank account before the order of attachment, therefore, and the attachment of bank account on the date of filing of return of income would not constitute a reasonable cause which prevented the payment of taxes. However, the Tribunal rejected the aforesaid submission of the Revenue by observing that the provisions of Section 140A(1) of the Act are attracted only when the assessee furnishes a return of income and Section 140A(3) is to operate from the date when the return of income is furnished if such a return is not accompanied by payment of admitted taxes. Accordingly, the financial position at the time of filing of return alone is relevant. Accordingly, the plea raised by the Revenue was rejected.

We have confronted the learned Counsel for the Revenue with the various findings of facts and asked her if there is any material even at this stage to show that the findings recorded by the Commissioner of Income Tax (Appeals) as also by the Tribunal may be regarded as perverse. Learned Counsel for the Revenue has not been able to show any such material nor is there any reference in any of the grounds of appeal which may lead us to conclude that the findings recorded by the authorities and the Tribunal are without any evidence. The High Court u/s 260A of the Act would not undertake exercise to appreciate and reappreciate evidence to reach a conclusion other than the one reached by the Commissioner of Income Tax (Appeals) and the Tribunal merely because such a view could also be a possible view. The only scope of interference u/s 260A of the Act do something is the presence of a substantive question of law. It is true that a bald finding based on no evidence could be interfered but not the one which are supported by the evidence. Therefore, no question of law much less a substantial question of law for determination of this Court warranting admission of the appeals arises. Accordingly, these appeal fail, which are consequently dismissed.

A photo copy of this order be placed on the files of connected cases.