Judgment:
1. The above-mentioned four appeals are taken together for the sake of convenience, since they relate to the same assessee and interdependent issues are involved.
2. Common submissions were made in all the four appeals. All the appeals have been filed by the assessee against the orders of the first Appellate Authority. On behalf of the appellant, a Paper Book containing 22 pages was filed including notice under Section 142(1) dated 19-10-1984, second notice under Section 142(1) dated 24-11-1984, third notice under Section 142(1) dated 15-5-1986, reply dated 21-5-1986, reply to notices under Section 271(1)(a) and 271(1)(b) copy of the assessment order, a copy of the order of the New Delhi 'A' Bench in the case of Handloom Intensive Development (Bijnore) Ltd. [IT Appeal Nos. 4306 to 4309 (Delhi) of 1989). The first leg of the arguments advanced before us was that penalty was discretionary. Especially arguing in ITA No. 1000(A)/1990, it was emphasised that there were 166 production centres and 200 show-roorns and compilation of material to enable the assessee to file the return in time was a gigantic task to be completed and that, by itself, should constitute a reasonable cause for late submission of the return. Reliance was placed by the learned counsel on Addl. CIT v. Chokhelal Sharda Prasad [1983] 143 ITR 801 (MP)(App.) and also on Supreme Court's decision in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 for his thesis that unless there is contumacious conduct, penalty should not be levied. He also quoted the case of Handloom Intensive Development Project Ltd. v. FTO [IT Appeal Nos. 3611 to 3614 (Delhi) of 1989] decided by Delhi Bench 'A' New Delhi wherein the cases were sent back to the file of the ITO for deciding afresh, after giving an opportunity to the assessee. The judgment in this case of the Income-tax Appellate Tribunal, Delhi Bench, New Delhi dated 25-10-1990 rests on the facts available in that case and we record a finding that the facts of that case are distinguishable from the facts of the case before us. It is seen by us that in ITA No.1000(A)/1990, the return should have been filed on or before 31st July, 1982. The assessee had moved a petition in Form No. 6 and time was extended upto 13-9-1982. The return was filed on 3-12-1984 and the assessment was completed on 26-5-1986. Before the Assessing Officer as well as before the first Appellate Authority, the reason given by the appellant-company was that Statutory Auditors were not appointed by the Company Law Board. We find that this point has been met by the first Appellate Authority when he says that there is no provision in the Income-tax Act, that return has always to be accompanied by the audited Profit and Loss account and Balance Sheet. The only requirement of law is that if an audit has been completed, audited accounts should be filed alongwith the return of income. The CIT(A), therefore, held that there was reasonable cause, which prevented the assessee from filing the return within the extended period. From the facts on record, we notice that non-auditing of the accounts was not a major hurdle in the assessee's way of filing the return of income, because ultimately when the return was filed on 3-12-1984, no statutory auditor had been appointed. The argument of the learned counsel was that subsequent notice under Section 142(1) condones the default made earlier, is not tenable, because it is a continuing default and nowhere is it laid down that once a notice under Section 142(1) is issued, earlier default committed gets condoned. Another contention of the learned counsel for the assessee was that it is a Govt. Company, and, therefore, the penalty was not justified. We are not impressed by this argument. Under Income-tax law, there is no distinction between a Govt. company and a non-govt. company, so far as the compliance of statutory requirements is concerned. We do not find that delay in the submission of the return was due to reasonable cause or due to the cause beyond the capacity of the assessee and, therefore, the default was clearly established and we decline to interfere with the order of the first Appellate Authority.
Once the default has been committed and once it is found that the default was without reasonable cause, levy of penalty is a natural corollary and we find nothing wrong in the approach of the Departmental authorities in this regard. The penalty levied for late submission of return under Section 271(1)(a) stands approved by us.
3. In ITA No. 1001 (All.)/1990 penalty has been levied by the ITO under Section 271(1)(b). This penalty has been imposed for non-compliance of notices under Section 142(1) and under Section 143(2) and also for failure to comply with the directions to get the accounts audited under Section 142(2A). We notice that the assessee is clearly guilty of failure to comply with notice under Section 142(1) for default of which the penalty levied, was merited, calling for no interference from us.
Here also, we hold that the distinction sought to be made out before us between a Govt. company and a non-Government company is not Justified because the law should be equally applied to all, unless any exception is laid down in the Statute itself. Since there is no such distinction laid down in the Income-tax Act, the failure to comply with the statutory requirement cannot be condoned by us simply because it is a Govt. company. The contentions to the contrary, therefore, are not accepted since they are not tenable and we find enough justification for the departmental authorities to have levied the penalty as they did in this case. The reasons given by the Departmental authorities should be deemed to be incorporated in our order also, because we agree with the same and we decline to interfere with the orders of the Departmental authorities. The appeal fails and is dismissed.
4. In ITA No. 1002(A)/1990, the learned counsel for the assessee argued that the CIT(A) erred in confirming the penalty under Section 271(1)(b) amounting to Rs. 1,84,873. The learned counsel emphasised the statement of fact in which it is mentioned that the appellant is a U.P. Govt.
owned corporation incorporated under the Companies Act, 1956 with the object of uplift of the socio-economic condition of the backward class of the people namely, the weavers. The audit of the appellant company was compulsory and the same had to be done by the Statutory Auditors.
The appellant company had no control over the appointment of statutory auditors. Since the statutory auditors were not appointed till date, the accounts were not finalised. The assessee filed estimate of advance tax and deposited the tax under the provisions of the Income-tax Act.
It was argued that it was only a procedural mistake that the assessee filed estimate of advance-tax instead of Statement of advance-tax. The argument of the learned counsel was that the estimate of advance-tax was filed instead of Statement of Advance-tax, and the penalty was not exigible. The reasons given by us above, will hold true in respect of this finding also. Simply because the assessee is a Government company, no preferential treatment can be given. The non-appointment of statutory auditors was again no reasonable explanation for not having filed the Statement of Advance-tax and for not having complied with requirement of law. The assessee was clearly in default and we decline to interfere with the orders passed by the Departmental Authorities in this regard. The appeal fails and is dismissed.
5. In ITA No. 1506 (All.)/1989, there is no dispute about the facts.
The penalty has been levied for non-submission of return in time. The following grounds have been taken :-- 2. That on the facts and circumstances of the case, the learned CIT (Appeals) erred in sustaining the penalty under Section 271(1)(a) for the period 1-4-1985 to 25-2-1986.
3. That the learned CIT (Appeals) erred in not appreciating the full facts of the case that there was reasonable cause which prevented the appellant in filing the return.
4. That the delay in filing the return was explained to the learned CIT (Appeals) who instead of accepting the entire delay has accepted it in part which is unjustified and arbitrary.
5. That the entire delay may kindly be accepted and the impugned penalty order may kindly be cancelled.
The facts of the case are that the assessee was under legal obligation to file a return of income on or before 31-7-1984. Notice under Section 139(2) was served asking the assessee to file the return of income.
This notice also remained uncomplied with. Assessment was completed on 25-2-1986 under Section 144 for non-compliance of the statutory notices. Penal action was initiated and show-cause notice under Section 271(1)(a) was served on the assessee. The assessee did not file reply for which a reminder dated 28-8-1987 was served on the assessee fixing the case for 10-9-1987. This notice also remained uncomplied with and a letter dated 12-10-1987 was served on the assessee fixing for 26-10-1987. No representation was filed nor any body appeared on the date fixed. It was clear that the assessee had no explanation to offer.
The Assessing Officer held that the assessee was liable to penalty under Section 271 (1)(a) for 18 completed months and he levied a sum of Rs. 4,15,800 under Section 271(1)(a) of the Act.
6. Before the first Appellate Authority, several contentions were raised. The learned First Appellate Authority in a speaking order running in four pages held that the appellant was clearly in default for the period 1-4-1985 and ending on 35-2-1986. There was an unexplained delay of 10 completed months for which period the penalty was exigible. The Assessing Officer was directed to recompute the penalty. The first Appellate Authority also held that penalty was not only leviable for belated return, but also for not furnishing the return. Against this order, the assessee is in appeal before us.
Various arguments were raised. These arguments, as held by us above, also, hold no water. Non-appointment of Govt. Auditors cannot be held to be a reasonable cause preventing the assessee from filing the return in time. We agree with the interpretation of the first Appellate Authority to the effect that there is no such provision under the Income-tax Act that the return cannot be filed without audit - the only requirement of law is that where the accounts of the assessee have been audited, the return should be accompanied by copies of the audited Profit and Loss account, Balance sheet and Auditor's report. It is not a statutory requirement that an audit and audited report must precede the filing of return. It is relevant to mention here that when the return was filed on 26-2-1986 on the basis of the Profit and Loss account prepared by the Corporation itself, by that date also, the auditors had not been appointed and the audit had not been completed.
No case has been made out and it has not been established that the Corporation was prevented by reasonable cause or causes beyond the control of the Corporation. The default of the appellant-corporation is of recurring nature inasmuch as it is for all the assessment years before us and this lackadaisical approach of the assessee cannot be held to be a reasonable cause for failure to comply with the requirement of law. The other reasons given by the first Appellate Authority in paragraphs 2, 3 and 4 of the order under consideration have our approval and we do not consider it necessary to reproduce the same, but it should be taken to be a part of our order also. In the end, we hold that the order of the first Appellate Authority suffers from no lacuna legal or factual and the same calls for no interference from us.