MADAN LAMBA v. COMMISSIONER OF INCOME TAX — 1981 DIGILAW 270 (DEL)

S. RANGANATHAN ( 1 ) THESE two income tax references, pertaining to the assessment years 1960-61 and 1961-62 (the relevant previous years being the financial years 1959-60 and 1960-61) can, be disposed of by a common judgment as they raise the same question and on similar facts. ( 2 ) MADAN Lamba, the assessee, is the irianaging partner of a firm known as Volga Restaurant, New Delhi. He had an eight annas share in the firm and was also entitled to a salary of Rs. 12,000 from the firm. The two other partners, together entitled to the other half share, were ladies who were closely related to the assessee. During the financial year 1959-60, the assessee was also a partner in a firm known as Volga Caterers, the business of which ended in a loss during the said year. ( 3 ) FOR the assessment years 1960-61 and 19 61-62 notices under Section 22 (2) of the Indian Income-tax Act, 1922 had been served on the assessee. ^ The returns of income for the two assesstment years should, in compliance with these notices, have been submitted by the assessee on or before the 12th July, 1960 and 18th July, 1961 respectively. It, however, appears that, for the assessment years 1960-61, the audit of the accounts of the firm, Volga Restaurant, was completed on 22-12-1962 and its return of income filed only on 24-12-1962 and that for the assessment year 1961-62, the firm filed its return of income only on 5-11-1965. Consequently, the assessee filed his returns for the two assessment years in question on 10-1-1963 and 5-11-1965 respectively. ( 4 ) THE Income-tax Officer completed the assessment for the year 1960-61 on 10-3-1965. The share income from Volga Restaurant was assessed at Rs. 1,65,848 on the basis of the assessment of the firm. After setting off the assessee s share of loss of Rs. 3,853 from Volga Caterers, the total income was determined at Rs. 1,61,995. for the assessment year 1961-62 the assessment was completed by the Income-tax Officer on 21-3-1966. As already stated the only income of the assessee was the share income from Volga Restaurant and this was taken at Rs. 94,007 on the basis of the firm s assessment. 3,853 from Volga Caterers, the total income was determined at Rs. 1,61,995. for the assessment year 1961-62 the assessment was completed by the Income-tax Officer on 21-3-1966. As already stated the only income of the assessee was the share income from Volga Restaurant and this was taken at Rs. 94,007 on the basis of the firm s assessment. ( 5 ) THE Income-tax Officer also issued notices to the assessee callicg upon it to show cause why penalties should not be levied under Section 271 (l) (a) for filing the returns for the two years belatedly. In response to the notices issued under Section 271 (1) (a) read with Section 274 the assesgee filed written explanations . It was stated that the assessee could not file his returns of income within time as his share of profits from the firm had not been properly determined and intimated earlier. It was stated that the delay was unintentional. The Income-tax Officer did not accept the explanation as reasonable. He observed in his order for 1960-61 that the assessee could have filed the return within time by declaring the share income as per the books of the firm. He was of opinion that it was a fit case for the imposition of the penalty. For the assessment year 1961-62 he proceeded to impose a penalty without specifically adverting to the assessee s explanation for the delay. Calculating the penalty at 2 per cent per month in respect of each month of default, the Income-tax Officer imposed a penalty of Rs. 48,460 for the assessment year 1960-61 and Rs. 22,430 for the assessment year 1961-62. ( 6 ) THE assessee preferred appeals to the Appellate Assistant Commissioner and contended, inter alia, that the mainlonly source of income being the share of profits from Volga Restaurant and the firm itself having submitted its return of income belatedly due to delay in the closing of its books, the appellant had reasonable cause for submitting his returns of income late. It was contended that as the books of the firm had not been closed the assessee s share income had not been determined and was not known to him and as such there was reasonable cause for his not filling the returns of income till the date when his share of profit was intimated. It was contended that as the books of the firm had not been closed the assessee s share income had not been determined and was not known to him and as such there was reasonable cause for his not filling the returns of income till the date when his share of profit was intimated. The Appellant Assistant Commissioner found that the assessee had filed his returns soon after the firm had filed its return for the assessment year 1960-61 and on the same date as the firm for the assessment year 1961- 62. He accepted the assessee s contention that the delay in the finalisation of the firm s accounts should be considered sufficient cause for the delay in the submission of a partner s return. He pointed out that under Section 271 (l) (a) a registered firm is liable to penalty on the same basis as if it were an unregistered firm this, according to him, indicated that, if a registered firm delayed its return of income, the delay in the filing of returns by its partners should be attributed to a reasonable cause for if a contrary view were held the penalty leviable on the registered firm and on its partners would be far in excess of the penalty leviable on an unregistered firm and its partners for the same default and this- could not have been the intention of the legislature, He also pointed out that, having regard to the statutory obligation on an assessee to satisfy himself that the return filed by him is correct and complete in all respects, he could not safely file the same before his share income was intimated to him by the firm. He, therefore, cancelled the penalties for the two years in question. ( 7 ) AGGRIEVED by the order of the Appellate Assistant Com- missioner, the Income-tax Officer preferred appeals to the Income tax Appellate Tribunal. On behalf of the appellant it was pointed out before the Tribunal that the assessee was a major partner in Volga Restaurant, the other two partners being his close relatives and that therefore the assessee himself had the control- ling interest in the firm and was also responsible for the filing of the returns of the firm belatedly. On behalf of the appellant it was pointed out before the Tribunal that the assessee was a major partner in Volga Restaurant, the other two partners being his close relatives and that therefore the assessee himself had the control- ling interest in the firm and was also responsible for the filing of the returns of the firm belatedly. The assessee, it was con- - tended, could not plead his own default, in not filing the return of the firm in time, as the excuse for the delay in filing his A own return. On the other hand, on behalf of the assessee, reliance was placed on certain orders of the Tribunal where a similar contention raised on behalt of the assessees had been accepted. ( 8 ) THE Tribunal accepted the department s appeals and set aside the orders of the Appellate Assistant Commissioner cancelling the penalties. In its order for 1960-61, the Tribunal observed that the orders of the Tribunal relied upon for the assesc see could not be taken as laying down "a universally applicable proposition that, if there is delay in the preparation of accounts of a firm constituting a reasonable cause that per se would be reasonable cause for the default of a partner in filing return of his income", and that each case had to be decided on its own - facts. The Tribunal distinguished two orders of the Tribunal on which the assessee had relied by pointing out that in one of them the assesee had no income other than the shareincome whereas here the assessee had not only the share income but also salary and other income. So, it held, this was not a proper case in which the assessee could be said to have had a reasonable cause even if, for the sake of argument, it was taken that the firm had a reasonable cause. In the order for 1961-62, the Tribunal rejected an additional ground raised by the assessee. It had been pointed out on behalf of the asses- see that a penalty under Section 271 (l) (a) had been imposed on the firm and upheld by the Tribunal and that, in view of the order levying penalty on the firm, no penalty should be imposed on the partner, as that would amount to double penalty. It had been pointed out on behalf of the asses- see that a penalty under Section 271 (l) (a) had been imposed on the firm and upheld by the Tribunal and that, in view of the order levying penalty on the firm, no penalty should be imposed on the partner, as that would amount to double penalty. The Tribunal rejected this contention observing that a firm and its partners were separate entities and that there was no question of double penalisation involved as Parliaiment in its wisdom had provided for imposition of penalties on the firm as well as its partners in respect of defaults committed by them. The appeals of the Department were, therefore, allowed for both the years. ( 9 ) THE assessee has come up on reference to this court from the orders of the Tribunal for the two years in question. The questions referred to us are : "whether on the facts and in the circumstances of the case the Tribunal was justified in upholding the Income-tax Officer s order imposing penalty under Section 271 (1) (a) of the Income-tax Act, 1961 for the assessmtent year 1960-61 ?" "whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of penalty under Section 271 (1) (a) of the Income-tax Act, 1961, for the assessment year 1961-62?"shri G. C. Sharma, learned counsel appearing for the asses- see contended that, under the Income-tax Act, a firm and its partners enjoyed a very peculiar position. Though they were separate and independent assessees, their assessments were mutually interconnected. The partner s total income depended on that of the firm because his share income determined on the basis of the fim s assessment was includible therein. No partner of a firm can file a valid return (whether he has other income or not) unless the books of account of the firm are finalised and its results including his share of profits become known to him. Hence when there is a delay in the account of the firm being finalised, for one reason or another, the partner is under a genuine handicap in filing his return till the firm finalises the accounts and files its return. Hence when there is a delay in the account of the firm being finalised, for one reason or another, the partner is under a genuine handicap in filing his return till the firm finalises the accounts and files its return. There is, therefore, reasonable cause for the delay on his part in filing his return of income till then Learned counsel, in this context, relied on the decisions in Venkateswara Power Rolling Mills and another v. CIT (1974- 79 ITR 168) (Mysore) (1) and CIT v. Baijnath Chosolia (1976-102 ITR 551) (Orissa) (2 ). He points out that this would be the position whatever may be the caluse for the delay in the firm s case. If the firm is genuinely in some difficulties and had reasonable cause for the delay in filing its return, then there A was no reason why the delay of the partner stemming from the same cause should be penalised even in a case where he may have other income but is prevented from filing his return on account of the firm s lapses. If, on the other hand, the firm s delay is not attributable to reasonable cause, the firm would no doubt expose itself to penal action but to hold that such delay would also justify a penalty in the case of the partners would result in great hardship and injustice, particularly in a case where the partners have no assessable income other than the share income. In this context, it should be remembered that where a firm whether registered or unregistered delayed the submission of its return a penalty was- imposable on it by reerence to the tax payable on its whole income as if it were unregistered firm. In a case where the partners have no income other than the share income from the firm, the penalty will again be by reference to the tax payable by each of them in respect of their respective share incomes, that is to say, in the hands of each of the partners individually and all of them put together there will be another penalty in respect of the same income or portions thereof. This, he submitted, would amount to a double penalty for what is, in essence, a single offence and he contended that this was not permissible in law. This, he submitted, would amount to a double penalty for what is, in essence, a single offence and he contended that this was not permissible in law. In support of this contention, learned counsel drew our attention to the decision in CIT v. Pratap Chand Maheshwar (1980-124 ITR 653) (3), following an earlier decision of the Allahabad High Court in Addl. CIT v. Smt. Triveni Devl (1974-97 ITR 390) (4 ). He further submitted that the position would be the same even in a case where the partner concer- ned has other sources of income, though perhaps in such a case it may be a matter for investigation whether, on the facts, the delay in theiling of the return was really dloe to a delay in the finalisation of the firm s books or whether it was merely an excuse utilised by the partner as a cover to postpone his return of income and consequent payment of tax on other substantial items of income earned by him. Finally, learned counsel submitted that the imposition of the penalty is not automatic but should be based on some contumacious conduct or wilful dis- A regard of the statutory obligations on his part (vide Hindustan Steel Ltd. v. State of Orissa, 1972-83 ITR 26, SC), (5 ). Even assliming that, on account of some bonafide mistake or misapprehension, the assessee thought that he was at liberty to postpone the filing of the return until the firm s books had been coai- pleted a penalty would not be imposable. ( 10 ) ON the other hand Mr. K. K. Wadhera, learned counsel for the department, submitted that the question whether there is reasonable cause or not for the delay in the filing of the returns is a pure finding of fact. He cited a large number of decisions in support of his contention. He urged that the issue of double jeopardy is an irrelevant consideration in the context of the Income-tax Act and that it would not be correct to import that concept, pertaining to the domain of criminal offences, into the present context which is governed by the explicit language of Section 271 (1) (a ). He relied upon the decisions in Addl. CIT v. Daroapandarinath Tuljayya and Co. (1977-107 ITR 650) (A. P.) (F. B.) (6), in Smt. Kamla Vati v. CIT (1978-111 ITR 248 ). He relied upon the decisions in Addl. CIT v. Daroapandarinath Tuljayya and Co. (1977-107 ITR 650) (A. P.) (F. B.) (6), in Smt. Kamla Vati v. CIT (1978-111 ITR 248 ). (P and H) (7) and Hanutram Ramprasad, Dibrugarh v. CIT (1978-112 ITR 187) (Guj.) (8 ). ( 11 ) AS we understand it, the case of the department is very simple. It says : the firm of Volga Restaurant is a separate assessable entity. AS such, it is under an obligation to file a return of income and if it delays the filing of the return without reasonable cause it may be subjected to a penalty. But this has nothing whatever to do with the present assessee though he is a partner m the firm. He is a distinct and separate assessee and he is under an entirely independent obligation to file his own return of income. His income may consist not only of the share income of the firm but other income as well. But whatever it is, if it exceeds the exemption limits, he has to file a return, particularly when called upon to do so by a notice under Section 22 (2 ). When such an assessee does not file his return as so required he had to show that the delay in attributable to reasonable cause. In the very nature of things, the question whether the firm had finalised its accounts for the relevant year or filed its return in time or, where its return had been delayed, whether the firm had good reason to delay its return is wholly irrelevant to decide the nature of the assessee s default. He could and should have filed the returns in time in compliance with his statutory obligations including therein the share income from the firm correctly (if the relevant figures were available) or onthe basis of an estimate subject to correction later (if such figures were not available ). He cannot avoid or postpone this obligation merely because another assessee connected with him, namely, the firm has also not been diligent in complying with its statutory obligations. That this cannot constitute reasonable cause will be easily appreciated if one remembers that the delay in the finalisation of the firm s accounts or in its filing the return is also attributable only to tne partners. That this cannot constitute reasonable cause will be easily appreciated if one remembers that the delay in the finalisation of the firm s accounts or in its filing the return is also attributable only to tne partners. The acceptance of such a plea, particularly in a case Hike this where the firm is practically controlled by the concerned partner, will only mean that a person can plead his own delay and default in a different capacity as a reasonable cause for the filing of his return belatedly. There are two different de- faults by two different assessees and there can be no valid objection to two different penalties being imposed. An apparent harshness of the result should not stand in the way of giving effect to this clear positionecause it was the intention of the legislature, when it inserted a provision that the penalty impossible on a registered finm should be on the same basis as an unregistered firm, that no advantage should be taken by the registered firm in the matter of levy of penalty of the lower rates of tax applicable to it and the concessional treatment accorded to it by the sta- ( 12 ) THERE is an apparent plausibility about this argument but we think it is too broadly stated and is also based on an over simplification of the several difficulties that arise in such cases. To begin with, while it is true that a firm is a dis- tinct taxable entity under the Act, the dichotomy between a firm and its partner is not complete and does not run through the entire scheme of the Act. It is mainly for purposes of convenience that the income of a firm is assessed at the point of first accrual to, or receipt by, the firm. However, the treatment given to the partners and the firm under the Act would show that they are not treated as completely independent entities and that the proceedings in the case of one have very much to do with the proceedings in the case of the other. There are a large number of contexts in the Act where it has not been possible to keep up the duality of the entities completely apart but, for our present purposes, it is unnecessary to dilate on those aspects. There are a large number of contexts in the Act where it has not been possible to keep up the duality of the entities completely apart but, for our present purposes, it is unnecessary to dilate on those aspects. ( 13 ) FOR purposes of assessment the Act makes a clear distinction between a registered firm and an unregistered firm. Till 1956, a registered firm paid no tax; its income was taxable only in the hands of the partners. However, after 1956, such a firm pays tax on its total income; its income is distributed among the various partners and the share of each is included in his total income; and the partners pay tax on their income inclusive of such share income minus the partner s share of the taxes already paid by the firm in respect of its total income. The result is that in the case of a registered firm, though theoretically both the firm and the partners are taxable, the firm is taxed at concessional rates, this tax is treated as paid by the partners pro rata and it is the partners that are really taxed by treating the share income from the firm as part of their total income. On the other hand, in the case of an unregistered firm, the firm is taxed on the same footing as an H. U. F. or an association of persons and at fairly heavy rates. So far as the partners are concerned they are not again taxed in respect of the share income though such share is taken into account only in order to arrive at the rate of tax applicable to them. The effect is that, in the case of an unregistered firm the income earned by the firm is taxed in the hands of the firm but is not again brought to tax in the hands of the partners. In other words, the Revenue looks for its tax, in the case of a registered firm, primarily from the partner and in the case of an unregistered firm, primarily from the firm. ( 14 ) THE above distinction is a very important one which has to be kep t in mind when we come to consider the special provision contained in the Act in regard to the levy of penalty in such cases viz. . Clause (d) to the proviso to viz. ( 14 ) THE above distinction is a very important one which has to be kep t in mind when we come to consider the special provision contained in the Act in regard to the levy of penalty in such cases viz. . Clause (d) to the proviso to viz. Section 28 (1) and 271 (2) of the 1922 and 1961 Acts respectively. The language of clause (d) of the proviso to Section 28 (1) of the 1922 Act was rather involved. It was introduced originally at a time when no lax was at all payable by a registered firm but was continued even after 1956 in the same form. Section ^ 271 (2) is more succinctly expressed. The brief effect of both the provisions is that the penalty on a registered firm is to be caloulated in the same manner as if the firm were an unregistered one. ( 15 ) WHAT is the reason for the legislature introducing such a provision ? One reason could be that the legislature proceeded on the basis that a penalty could be levided only on the firm and not on the partners in such cases where there is delay, default or concealment of the types envisaged in Section 28 (1)1271 (1) on the part of the firm as such and that it enacted the provision because it did not want registered firms to escape the rigour of the penal provisions by reason of their tax rate being nil or minimal. We say this for, were one to consider that partners were also liable to penalty in such cases, such a. provision would not at all have been necessary for the partners of a registered firm, who are the real persons taxable, would be called upon to pay penalties on the basis of their share income and no question would have arisen of the firm, as such, securing any undue advantage which needed to be provided against by the legislature. Another way of looking at the provision would be this. It is clear that the legislature intended to equate a registered firm with an unregistered one in the matter of penalty. In the case of an unregistered firm, the firm pays penalty on the basis of the tax on its total income. Another way of looking at the provision would be this. It is clear that the legislature intended to equate a registered firm with an unregistered one in the matter of penalty. In the case of an unregistered firm, the firm pays penalty on the basis of the tax on its total income. Even if penalty proceedings are initiated against a partner, and a penalty is imposed on him it will be only with reference to the tax payable by him and since he is not liable to any tax on his share income from the firm there will be no penalty in his hands qua the share income. On the other hand, in the case of a registered firm, the share income will be taxable in the hands o the partner and so a penalty in his hands would have relavance to the share income in his hands. It is the discrimination that this situation entails which the legislature sought to avoid in an indirect manner by enacting the above provision. Looked at from the above angles, the provision in regard to penalty on registered firms noticed above can be interpreted as an implied prohibition against the imposition of a penalty on a partner for the delay, default or concealment referable to his income from the firm. This would not only give full meaning and context to the provision but also obviate an imposition D of a double penalty qua the same income. It is on this approach that the decisions of the Punjab and Haryana High Court and of the Allahabad High Court which have been relied upon by Shri Sharma are based. ( 16 ) WE may next refer to another aspect, which is of some importance, in considering how far the firm and partners could be considered totally independent of each other in the matter of filing the ieturns. As we have already pointed out. the share income derived by a partner from a firm has to be included in Ms return as a part of his total income whether the firm be a registered one or an unregistered one. Unless it is included in his total income the tax payable thereon (in the case of a registered firm) and the tax rate at which he has to be taxed on his other income (in the case of an unregistered firm) Cannot be known. Unless it is included in his total income the tax payable thereon (in the case of a registered firm) and the tax rate at which he has to be taxed on his other income (in the case of an unregistered firm) Cannot be known. Such tax determination at the time of filing the return is of great importance in view of the provisions for self-assessment containej in the Act ard will also have several consequential results. Hence, the details of the share income constitute one of the columns which has to be filled in when filing his return. It is highly doubtful * whether a return filed by him without including his share income or by purely estimating it would be a valid ieturn at all. It is, therefore, essential that the figure of his share income must be available to him before he can file a correct and complete return. If such figures are not available because of the delay in the completion of the firm s accounts the partner cannot be said to be without reasonable cause for delaying his return and this would be so whether there was reasonable cause for the delay in the firm s completion of accounts or not. If such delay is attributable to reasonable cause, a fortiori the partner s delay is also due to reasonablecause. To give an illustration, suppose a firm were to delay the filing of its return because the finalisation of its accounts is held up due to the serious illness of the munim or the partner who is in charge of the accounts and the Income-tax Officer accepts the position that the delay in the filing of the return is attributable to reasonable cause, then it would be inconsistent and inequitable to hold, in the case of a partner who files his return soon after the books are finalised and the firm s return is filed, that the delay is without reasonable cause. To us it appears that if there is a delay on the part of the firm in the filing of its return which could be attributed to reasonable cause, a delay on the part of the partner to the same extent and perhaps a reasonable time thereafter would certainly be attributable to reasonable cause. To us it appears that if there is a delay on the part of the firm in the filing of its return which could be attributed to reasonable cause, a delay on the part of the partner to the same extent and perhaps a reasonable time thereafter would certainly be attributable to reasonable cause. The view taken by the Tribunal that even if there was reasonable cause for the delay in the filing of the return by the firm there could not be said to be reasonable cause for the partner s delay is incorrect. If, on the other hand, there was no reasonable cause for the delay on the part of the firm, the firm itself would be liable to. a penalty and as it could not be said that the partner should have filed his return without the final figures in the case of the firm, he cannot penalised for the delay or default. This broadly, is the approach of the decisions of Venkateswara Power Rolling Mills and another v. CIT (1974-97 ITR 168) (Mysore), CIT v. Baijnath Chopolia (1976-102 ITR 551) (Orissa) and CIT v. Pratap Chand Maheshwari (1980-124 ITR 653) (Pandh ). ( 17 ) IT appears to us that, while the two aspects which we have discussed above, are relevant and have to be taken into account to decide whether the delay in a particular case is attributable to reasonable cause, neither of them can be made the sale ground for relieving the partner of all liability to penalty in all cases where the delay in the partner filing a return, is attributed to a delay on the part of the firm in finalising its accounts. We say so beca*use the statute does not expressly or impliedly bar proceedings against both the firm and the partners, The only statutory requirement for the imposition of a penalty on an assessee whether he be a firm or a partner is that contained in Section 271 (1 ). All we have to see is whether there was reasonable cause for his default or delay in filing a return. While the considerations above indicated could be relevant in most cases, they cannot be conclusive in all cases, for answering this question. We shall now indicate the situations in which those aspects lose their significance in judging the conduct of a partner. While the considerations above indicated could be relevant in most cases, they cannot be conclusive in all cases, for answering this question. We shall now indicate the situations in which those aspects lose their significance in judging the conduct of a partner. ( 18 ) TO ke up first the ground of "double penalty" it will be seen that this depends upon the extent of income of the firm and the sources of income of its partners. A distinction will at once be apparent between a case in which the firm has a large income and the partner has no income cither than his share income and one in which where the firm s income is small and the partner has substantial income from other sources too. To give a very simple illustration where a partner of an unregistered firm has no other income, he cannot be penalised at all for the entire income would be taxed in the hands of the firm and so far as he is concerned there is nothing taxable at all. Hence if the firm has either delayed the return or concealed its income it will be subjected to the appropriate penalties but the partner would stand outside such proceedings as they will have no impact on his individual assessment. On the other hand, it is quite conceivable, that where a partner (even of an unregistered firm) has other income the position is quite different. He may be able to postpone a good amount of tax payable by him on his share income or other income by delaying the firm s return. The circumstances that the firm may be liable to a penalty is of no practical effect because the tax with reference to which the firm will be penalised will bear no relation at all to the tax the payment of which has been delayed by the partner. To give an illustration, where a registered firirm having five partners has- an income of Rs. 50,000 but each of the partners has about a lakh of rupees of other income it could be totally impossible to consider the Revenue fully compensated for the default or delay merely because a penally may have been imposed on the firm. To give an illustration, where a registered firirm having five partners has- an income of Rs. 50,000 but each of the partners has about a lakh of rupees of other income it could be totally impossible to consider the Revenue fully compensated for the default or delay merely because a penally may have been imposed on the firm. The penalty on the firm in such a case would have had no relation to a major part of the partners income and tax and the charge of double penalty would be true only in form and not in substance. ( 19 ) TAKING up the second aspect, again, it iand easy to appreciate that the correct position would depend very much on the nature of the constitution of the firm and the relative positions of the partners. For instance it is quite conceivable that a firm may consist of four partners three of whom are dominent capitalist partners sharing 95 per cent of the income and the fourth is a working partner getting only 5 per cent of the profits. The delay in the filing of the return or any attempt of conccalment made by the firm may be entirely attributable to the copitalist partners and the working partner may have nothing to do with it. In such a case it would not be correct to hold the working partner responsible for the delay in the filing of his individual return as he could not file it earlier due to the difficulties in the finalisation of the firm s accounts or for the concealment of the income of the firm for which he was not responsible. On the other hand, it is equally possible that there may be a case in which the partner in question is substantially controlling the affairs of the firm and that he holds up the finalisation of the accounts and filing of the firm s return to suit his convenience and only with a view to postpone the payment of tax on his share income or on his other income. To the extent such delay is caused by him and is instrumental in the payment of tax in his individual assessment there is no reason why penalty should not be imposed on him merely because there was some delayin the firm s case. To the extent such delay is caused by him and is instrumental in the payment of tax in his individual assessment there is no reason why penalty should not be imposed on him merely because there was some delayin the firm s case. These illustrations show that it may not always be equitable, just or necessary to assume always that a partner cannot be held responsible for the firm s delay. We are, therefore, unable to agree with the attempts of counsel before us to evolve from Mysore, Orissa and Punjab and Haryana High Courts on the one hand and the Punjab and Allahabad High Courts on the other (which are based on the facts of the cases before them) ceretain grounds of general principles universally applicable to all cases. It seems to us that a conclusion has to be reached in each case on a consideration of all the circumstances including the two grounds indicated above and that it would be unsafe and incorrect to enunciate any principle of general application to all situations. Confining ourselves for the time being to Section 271 (l) (a) we think that the imposability of penalty on a partner should depend upon a consideration of the following circumstances: (a) whether he is a partner of a registered firm or unregistered firm; (b) whether he has income other than the share income or not and if so the nature and extent of such income; (c) whether he is one of several partners to whom any contumacious conduct on the part of the firm could not be attributed or whether he is for all practical purposes the brain behind the firm or able to control its affairs and so responsible for its delays and defaults; whether any penalty has been or can be imposed on the firm and if so the extent and nature thereof; and (e) whether the partner has any independent reasons for the delay in the filing of the return apart from that urged in the case of the firm. ( 20 ) APPLYING the above principles to the facts of this case we find that the assessee, though he is a controlling partner in the firm, has no income other than share income from the firm in the assessment year 1961-62. (We may point out that the salary income is also part of such share income ). ( 20 ) APPLYING the above principles to the facts of this case we find that the assessee, though he is a controlling partner in the firm, has no income other than share income from the firm in the assessment year 1961-62. (We may point out that the salary income is also part of such share income ). Also, a penalty has also been imposed on the firm. So far as assessment year 1960-61 is concerned he had an interest in some other firm but it had resulted in a loss and therefore the delay in the filing of the return by the partner did not affect the tax liability on any income other than the share income. As such, the fact that there was a delay of about 2 years and 4 years in filing the returns for the assessment years 1960-61 and 1961-62 respectively is not material. ( 21 ) IN these circumstances, we have come to the conclusion that the delay in the filing of the returns cannot be said to be without reasonable cause and therefore no penalty could be imposed on the present assessee for the assessment years 1960-61 and 1961-62. We, therefore, answer the questions referred to us in the negative and in favour of the assessee. The assessee will be end tied to his costs : counsel s fee Rs. 500 (onesets ).