1998 (5) TMI 401 - AT - Income Tax

Summary

Issues: Penalty under section 271(1)(c) of the IT Act, 1961 for delayed filing of return of income for the assessment year 1984-85.

Detailed Analysis:
1. Issue of Penalty Imposition: The appeal was filed against the penalty order under section 271(1)(c) of the IT Act, 1961 for the assessment year 1984-85 due to delayed filing of the return of income. The assessing officer (AO) imposed a penalty of Rs. 28,404, being 2% of the tax payable for a 9-month delay, as the assessee failed to submit the return on time despite having sufficient funds available. The AO did not accept the explanation provided by the assessee regarding the delay.

2. Submission before CIT(A): The assessee appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], reiterating the explanation given to the AO. The authorized representative produced a receipt supporting the claim that an application for an extension of time was filed before the Income Tax Officer on 1st August 1984. It was argued that financial difficulties and the late filing of the return for the previous assessment year contributed to the delay. The CIT(A) accepted the claim, directing the AO to calculate the penalty from 1st January 1985 onwards.

3. Appeal before the Tribunal: The assessee further appealed before the Tribunal, presenting arguments and relying on previous decisions where interest and penalties were waived due to reasonable causes similar to the present case. The Tribunal noted that the AO had previously waived interest under sections 139(8) and 217 of the IT Act, 1961, acknowledging the reasonable cause for the delay. The Tribunal found merit in the arguments presented by the assessee's counsel and vacated the CIT(A)'s order, ultimately allowing the appeal.

4. Tribunal's Decision: After considering the submissions, orders of the authorities, and the evidence presented, the Tribunal concluded that the appeal by the assessee deserved to succeed. The Tribunal noted that the AO had previously waived interest under relevant sections of the IT Act, 1961, due to reasonable causes, as supported by previous tribunal decisions cited by the assessee's counsel. Consequently, the Tribunal vacated the CIT(A)'s order and allowed the appeal, ruling in favor of the assessee.

In summary, the Tribunal overturned the penalty imposed under section 271(1)(c) of the IT Act, 1961 for the delayed filing of the return of income for the assessment year 1984-85, considering the reasonable cause for the delay and the precedent of waived interest under relevant sections of the Act.