2001 (11) TMI 65 - HC - Income Tax

Summary

Issues Involved:
1. Whether the penalty under section 271(1)(a) of the Income-tax Act, 1961, was leviable only for the period of default beginning from October 1, 1984, and not from November 1, 1982.
2. The validity of the applications for extension of time filed by the assessee.
3. The interpretation of the letter dated September 4, 1984, as an application for extension of time.
4. The implications of the Assessing Officer not passing an order on the application for extension of time.
5. The justification for the imposition of penalty under section 271(1)(a) of the Income-tax Act.

Detailed Analysis:

1. Leviability of Penalty Period:
The Tribunal held that the penalty was leviable only from October 1, 1984, based on the assessee's letter dated September 4, 1984. The High Court disagreed, finding that the penalty period should commence from January 31, 1983, when the last valid extension expired, until the return was filed on November 29, 1984. The Tribunal's decision was deemed unsatisfactory as it lacked proper discussion and justification.

2. Validity of Applications for Extension:
The assessee initially filed an application for extension till October 31, 1982, which was granted. A subsequent application on December 14, 1982, seeking an extension till January 30, 1983, was not acted upon by the Assessing Officer. The court held that the application made on December 14, 1982, could be considered valid despite being filed after the initial extension expired, in line with the Supreme Court's decision in CIT v. Ajanta Electricals.

3. Interpretation of the Letter Dated September 4, 1984:
The court rejected the assessee's contention that the letter dated September 4, 1984, could be treated as an application for extension of time. The letter was not in Form No. 6 as required by the proviso to section 139(2) and Rule 13 of the Income-tax Rules. Therefore, it could not be considered a valid application for extension.

4. Implications of Assessing Officer's Inaction:
The court noted that the failure of the Assessing Officer to pass an order on the application dated December 14, 1982, or communicate a rejection, allowed the assessee to presume that the extension was granted. This principle was supported by various High Courts and the Supreme Court's decision in CIT v. Ajanta Electricals, which held that an application for extension could be made even after the original period expired, and silence from the Assessing Officer could be construed as acceptance.

5. Justification for Imposition of Penalty:
The court held that the failure to file a return itself invites penalty under section 271(1)(a) of the Act, and no mens rea or contumacious conduct is required. The burden is on the assessee to prove reasonable cause for the delay. The assessee's explanations were found insufficient. The court affirmed the findings of the Assessing Officer and the Commissioner of Income-tax (Appeals) that there was no reasonable cause for the delay from January 31, 1983, to November 29, 1984.

Conclusion:
The High Court answered the question in the negative and in favor of the Revenue, holding that the penalty under section 271(1)(a) was leviable for the period of default beginning from January 31, 1983, till the filing of the return by the assessee. The Tribunal was directed to issue consequential orders.