2004 (5) TMI 521 - AT - Income Tax

Summary

Issues: Dispute over levy of penalty under section 271B for assessment year 1996-97.

Analysis:
1. The appellant disputed the penalty under section 271B, claiming the delay was inadvertent due to the advocate's forgetfulness in filing the return of income despite receiving the audit report under section 44AB on time. The appellant relied on the affidavit of the advocate, Shri H.K. Jain. The Commissioner of Income-tax (Appeals) did not believe the affidavit, citing improbability, without proving it impossible. The assessing officer and the CIT (Appeals) did not examine Shri H.K. Jain, who filed the affidavit. The rejection of the appellant's explanation was primarily based on disbelief in the affidavit. The Tribunal opined that an advocate's affidavit should not be disbelieved in such a manner. Considering the facts presented in the affidavit, the default was due to no fault of the appellant. Consequently, the Tribunal canceled the penalty and allowed the appeal.

2. The Tribunal found that the delay in filing the return of income was not intentional on the part of the appellant but was a result of the advocate's oversight. The Tribunal emphasized that the affidavit filed by the advocate should have been given due consideration, especially since the default was not attributable to the appellant. By acknowledging the circumstances leading to the delay and the lack of fault on the appellant's part, the Tribunal deemed it appropriate to cancel the penalty imposed under section 271B. As a result, the appeal filed by the appellant was allowed, overturning the decision of the Commissioner of Income-tax (Appeals) regarding the penalty.