High Court Remands ITO Decision on Tax Return Extension Request, Emphasizes Need for Reasonable Cause Determination

The High Court directed a remand to the Income Tax Officer (ITO) to consider the application for an extension of time filed by the assessee for filing the income tax return. The Court emphasized the need for the ITO to provide a speaking order on whether a reasonable cause was demonstrated for the delay. The Tribunal's finding of no reasonable cause was deemed non-binding as it did not consider relevant legal provisions. The Court held that the ITO was obligated to consider applications for extension even if filed after the due date, as permitted by Form No. 6. Each party was to bear its own costs.

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Issues involved:
The issue involves the imposition of penalty under section 271(1) of the Income Tax Act, 1961 for the assessment year 1970-71 due to the delay in filing the income tax return.

Judgment Details:

The Tribunal referred the question of whether the penalty under section 271(1) was leviable in this case to the High Court. The assessee filed the return after the due date, claiming to have applied in Form No. 6 for an extension, but no evidence was produced to support this claim. The Income Tax Officer (ITO) imposed a penalty under section 271(1)(a) as no explanation was provided for the delay. The Appellate Authority Commission (AAC) upheld the penalty, stating that there was no evidence of a reasonable cause for the delay. The Tribunal also upheld the penalty, noting that the application in Form No. 6 was filed after the due date had passed, and there was no valid reason for the delay.

The High Court found that the non-consideration of the application by the ITO was unjustified, especially when the application was filed. The court emphasized that the ITO should have considered the application explaining the delay, as the burden of proof of reasonable cause lies with the assessee. The court cited precedents from the Orissa and Kerala High Courts regarding the burden of proof on the assessee to establish a reasonable cause for the delay in filing the return.

The High Court disagreed with the view that the ITO was not obliged to consider an application for an extension filed after the due date unless valid grounds were provided. The court held that Form No. 6 itself allowed for such applications after the expiry of the filing period. The court also noted that the Tribunal's finding of no reasonable cause was not binding, as it did not consider the relevant provisions of law.

The High Court concluded that the Tribunal erred in deciding on the reasonable cause and directed a remand to the ITO to consider the application for an extension on merits. The court emphasized the need for a speaking order by the ITO on whether a reasonable cause was shown for the delay in filing the return.

In conclusion, the High Court held that the Tribunal should remand the matter to the ITO for a proper consideration of the application for an extension of time, allowing all parties a reasonable opportunity, and then pass orders accordingly. Each party was directed to pay its own costs.

Judge C. K. Banerjee concurred with the judgment.

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