2002 (1) TMI 951 - AT - Income Tax

Summary

Issues:
Reduction of penalty under section 272A(2)(e) of the Income-tax Act, 1961 for the assessment year 1993-94 from Rs. 12,200 to Rs. 1,000.

Analysis:

1. Reduction of Penalty:
The Department appealed against the reduction of penalty imposed under section 272A(2)(e) of the Income-tax Act, 1961 from Rs. 12,200 to Rs. 1,000 for the assessment year 1993-94. The assessee filed the return late by 122 days, citing delayed receipt of the audit report and the accountant's leave as reasons. However, the DDIT found that the audit report was signed on time, and the income was not exempt under section 10(22) of the Act, justifying the penalty imposition.

2. CIT(A)'s Decision:
The assessee, running an educational institution, claimed exemption under section 10(22) of the Act and argued against the penalty. The CIT(A) acknowledged the exemption but emphasized the obligation to file returns on time due to registration under section 12A. Considering the source of income and nature of the institution, the CIT(A) reduced the penalty to Rs. 1,000.

3. Legal Arguments:
The Department contended that the CIT(A) erred in reducing the penalty below the prescribed limit despite acknowledging the liability. The assessee's counsel argued that the excess of expenditure over income negated the obligation to file the return under section 139(4A) of the Act, citing a previous Tribunal decision supporting this stance.

4. Judgment and Precedent:
The Tribunal, after evaluating the case and legal precedents, concluded that no penalty under section 272A(2)(e) was warranted. While recognizing the Department's argument on the prescribed penalty limit, the Tribunal found no liability for the assessee to file the return under section 139(4A) of the Act. Despite the lack of challenge to the sustained penalty of Rs. 1,000, the Tribunal dismissed the appeal, drawing support from a Madras High Court decision and emphasizing the specific circumstances of this case.

In summary, the Tribunal dismissed the appeal, maintaining the reduced penalty of Rs. 1,000, based on the unique circumstances and legal analysis of the case, ultimately finding no grounds for the originally imposed penalty under section 272A(2)(e) of the Income-tax Act, 1961.