1989 (5) TMI 119

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.... searched on 14-7-80 whereas within two days of the search i.e. on 16-7-80 the Managing Partner of the assessee-firm Shri Balram Hemdev died. Shri Balram Hemdev, during his lifetime used to look after everything concerning the firm and he did not train the other partners in this regard. Further, the books and records of the assessee-firm were with the Income-tax department and with much difficulty, the assessee-firm was able to file its return on 26-8-83. The Income-tax Officer, while passing the penalty order on 15-7-85, held that the assessee had reasonable cause in not filing the return only up to 31-7-82 and subsequently there was no sufficient cause for delay. Therefore he found the period of penalty from 1-8-82 and imposed a penalty of Rs. 4,572. 2. In appeal, the learned CIT(A) in her orders dt. 14-5-86 held that she was convinced that the demise of the Managing Partner took place on 16-7-80 and it constitutes a satisfactory reason for delay in filing the assessee's return and on that sole ground she deleted the penalty. The department is in second appeal. 3. We have heard Shri N. Jayakar, learned D. R. for the department and Shri K. Ranganathachary, learned advocate f....

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....or the assessee should not be allowed to take up the said plea. 4. After hearing both sides we are of the opinion that the objection raised by the learned D.R. for a new argument to be raised before us on behalf of the assessee is not tenable. The revenue did not dispute that he approached the Settlement Commission to determine its income for asst. years 72-73 to 80-81. So also it did not dispute the submission that the balance-sheets, as well as, profit and loss accounts, together with the statement of facts, for each of those years were submitted, before the Settlement Commission, on 29-4-83. Thus, when the above are the admitted facts, the question is whether a legal argument based on undisputed facts can be allowed to be raised comes up for consideration. In our opinion, the argument is only a pure legal argument based on undisputed facts. According to us a pure legal argument or an argument of a mixed fact and law which depends upon undisputed facts, can be raised even at the second appeal stage. Therefore the preliminary objection of the learned D.R. is hereby overruled. 5. Now, let us come to the merits of the contentions raised by Shri Ranganathachary, learned advocat....

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....cts on hand. Shri Ranganathachary referred to s. 245(D)(4) & 245(I) to impress upon us about the powers of the Settlement Commission and the finality of the orders, if any passed by the Settlement Commission, with regard to matters mentioned in the petition filed before the Settlement Commission, or the matters reported to it by the Commissioner, though not mentioned in the petition. In the case of a firm, Shri Ranganathachary argued that the closing stock valuation, if any, determined for asst. year 80-81, should be taken to the opening balance of the stock, for asst. year 81-82. So also the W.D.V. determined of any plant and machinery, for asst. year 80-81, is very essential to provide and to claim further depreciation for the subsequent asst. year viz., 81-82. Therefore, he argues that the order which the Settlement Commission may pass upto asst. year 80-81, is quite essential for furnishing an accurate income-tax return for asst. year 81-82. In the facts before us up to 29-4-83, only the statement of facts along with balance sheets and profits and loss accounts were filed before the Settlement Commission and admittedly by the date of filing the return i.e. 26-8-83, the Settleme....

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.... file the return for 81-82, after obtaining the information from the account books. If so what would be the reasonable time required for finalising the accounts for asst. year 81-82 with the help of the back accounts. The learned advocate for the assessee also invited our attention to the Supreme Court's decision in Mst. Katiji's case where the following dictum is laid down for guidance of subordinate courts and Tribunals :-- "When substantial justice and technical considerations are pitted against each other the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." He also cited a latter Calcutta decision in Assam Co. (India) Ltd.s case only to show that even in an extreme case where some Directors of the assessee-company were in United Kingdom and there was delay caused in obtaining their signatures on the returns to be filed, even that fact also was considered to be a reasonable cause for the delay. 6. The learned D.R. on the other hand vehemently contended that substantial time was already conceded even by the Income-tax Officer and the period for which he....