GODIJI PARSHWANATHJI JAIN VS COMMISSIONER OF INCOME-TAX.
1999 P T D 1642
[226 I T R 798]
[Gujarat High Court (India)]
Before R.K. Abichandani and R. Balia, JJ
GODIJI PARSHWANATHJI JAIN
Versus
COMMISSIONER OF INCOME-TAX.
Income-tax Reference No.80 of 1984, decided on 20/02/1997.
Income-tax---
----Penalty---Charitable trust---Delay in tiling return---Tax payable nil on account of exemptions under Ss. 11 & 12---No reasonable cause shown for delay---Levy of penalty valid---Indian Income Tax Act, 1961, Ss. 11, ,12, 139(4A) & 271(1)(a).
Where without giving effect to the provisions of sections I 1 and 12, a charitable trust has income chargeable to tax exceeding the limit up to which tax is not leviable, then under subsection (4A) of section 139 of the Income Tax Act, 1961, it is obligatory on the part of the trustee to file the return in respect of the assessment year without notice. The requirement of furnishing a return under section 139(4A) arises in the circumstances where a charitable trust has taxable income in the previous year unless resort is taken to sections I1 and 12 for the purposes of excluding income which has been accumulated to the extent permissible or has been applied to the charitable objects for which the trust exists. Section 139(4A) makes it further clear that in such cases the return is considered to be one required under sub section (1). Reading the two provisions together makes it further clear that the-fact that ultimately the entire income is exempt from payment of tax by invoking the provisions of sections 11 and 12 has no bearing on the question of levy of penalty when the obligation to tile the return within time has not been discharged and the explanation for the late filing of the return was not found to be acceptable by the fact finding authority.
Held accordingly, on the facts, that the Tribunal was justified in confirming the penalty even when no tax was payable at all by the assessee, a charitable trust, on account of exemptions under appropriate provisions of law, namely, sections 11 and 12 of the Act, when it did not find any reasonable cause for the delay in filing of the return.
D. A. Mehta, R.K. Patel and B.D. Karia for K.C. Patel for the Assessee
M. J. Thakore instructed by Manish R. Bhatt for Respondent No
JUDGMENT
RAJESH BALIA, J.---The assessee, a public charitable trust, filed its return for the assessment year 1976-77 on June 30, 1978, showing a loss of Rs.1,31,740. The return was due to be filed on June 30, 1976 as per the provisions contained in section 1.39(4A) read with section 139(1) of the Income Tax Act, 1961. The assessment was completed b~ computing the net loss as Rs.85,402. Since the return was due on June 30, 1976 and filed after two years, penalty proceedings under section 271(1)(a) of the Act were initiated for late filing of the return. The Income-tax, Officer did not find the cause furnished by the assessee reasonable and levied a penalty in the sum of Rs,3,830 by its order, dated December 9, 1980. While the Appellate Assistant Commissioner deleted the penalty by accepting the explanation furnished by the assessee for delayed filing of the return, the Tribunal, vide its order, dated July 23, 1983, did not accept the explanation for the delay furnished by the assessee to be reasonable and held that the delay must be considered contumacious and restored the penalty levied by the Income-tax Officer. The contention had been raised that as the ultimate assessment was at nil income and the charitable trust was exempt from payment of tax, no penalty could be levied for delayed filing of the return under section 271(1)(a), which also did not find favour with the Tribunal.
In the aforesaid circumstances, the Tribunal, at the instance of the assessee, has submitted the statement of case and referred the following question of law arising out of its appellate order under section 256(1) of the Act.
"Whether the Tribunal was justified in confirming the penalty when no tax was payable at all by the assessee being duly exempted under an appropriate provision of law?"
Section 271(I)(a) during the relevant period in question provided that where an assessee has without reasonable cause failed to furnish the return of total income which he was required to furnish under subsection (1) of section 139 or in pursuance of notice given under section 139(2) or section 148, he is liable to penalty for such late filing of the return. The penalty prescribed in such cases with reference to the charitable trust liable to furnish the return of income under subsection (4A) of section 139 is, where the total income in respect of which it is assessable does not exceed the maximum amount which is not chargeable to income-tax a sum not exceeding one per cent. of the total income computed under the Act. It further envisages that in the cases of such assessees, for the purposes of levy of penalty, the computation of income must be such which results without giving effect to the provisions of sections 11 and 12 of the Act. This is also the requirement of subsection (4A) of section 139 which gives rise to an obligation on the part of such representative assessee to file a return without notice, that is to say, where without giving effect to the provisions of sections 11 and 12, a charitable trust has income chargeable to tax exceeding the limit up to which tax is not levied then it is obligatory on the part of the trustee to file the return in respect of the assessment year without notice. In other words requirement of furnishing a return under section 139(4A) arises in the circumstances where a charitable trust has taxable income in the previous year a unless resort is taken to sections 11 and 12 for the purposes of excluding such income which has been accumulated to the extent permissible or has been applied to the charitable objects for which the trust exists. It is not in dispute that the returns in the present case were due under section 139(4A). Section 139(4A) makes it further clear that in such cases the return is considered to be one required under subsection (1). Reading the two provisions together makes it further clear that the fact that ultimately the entire income is exempt from payment of tax by invoking the provisions of sections 11 and 12 has no bearing on the question of levy of penalty when the obligation to file the return within time has not been discharged and the explanation for the late filing of the return has not been found to be acceptable by the fact finding authority.
In these circumstances, we have no hesitation in coming to the conclusion that the Tribunal was justified in confirming the penalty even when no tax was payable at all by the assessee on account of exemptions under appropriate provisions of law, namely, sections 11 and 12 of the Act, when it did not find the cause furnished by the assessee, for the- delay in filing of the return, reasonable. It is not the case of the assessee that in the assessment of income, exemptions other than under sections 11 and 12 have been taken into consideration.
Accordingly, we answer the question referred to us in the affirmative, that is to say, in favour of the Revenue and against the assessee. The reference stands disposed of with no order as to costs.
M.B.A./2089/FCOrder accordingly.