1995 (8) TMI 33 - HC - Income Tax

Summary

Issues Involved:

1. Justification of penalty levied against the legal representative for delayed filing of income-tax returns.
2. Validity of the penalty proceedings without serving notice to other legal representatives.
3. Determination of reasonable cause for delay in filing returns beyond a specified date.

Issue-wise Detailed Analysis:

1. Justification of Penalty Levied Against the Legal Representative for Delayed Filing of Income-Tax Returns:

The core issue was whether the Appellate Tribunal was justified in upholding the penalty levied against the widow of the deceased, Bhutnath Dutta, for the delayed filing of income-tax returns for the assessment years 1972-73 and 1973-74. The returns were filed voluntarily by the widow on June 29, 1974, after a delay of 23 months and 10 months, respectively. The Income-tax Officer imposed penalties of Rs. 14,037 and Rs. 2,887 for these delays. The widow contended that she was not conversant with the business affairs and had no idea regarding the filing of returns, constituting a reasonable cause for the delay. However, the Appellate Tribunal found no reasonable cause for the delay from December 1, 1973, and upheld the penalties. The High Court, upon review, found that the Tribunal did not adopt the correct legal approach, noting that the penalty proceedings are quasi-criminal and require proof of deliberate defiance of law or conscious disregard of obligations, which was not established in this case.

2. Validity of the Penalty Proceedings Without Serving Notice to Other Legal Representatives:

The widow argued that the penalty proceedings were vitiated because no notice was served on the other heirs and legal representatives who had become major. The Tribunal found that the widow filed the returns as the sole legal representative and did not raise this issue before the assessing authority. The Income-tax Officer bona fide believed that the widow was the sole legal representative. The High Court upheld this view, stating that the imposition of penalty was not vitiated due to non-service of notice to other major children, as the widow did not contest this point initially.

3. Determination of Reasonable Cause for Delay in Filing Returns Beyond a Specified Date:

The Tribunal held that the widow had sufficient knowledge about the income from various properties by November 9, 1973, when she filed the estate duty returns. Therefore, there was no reasonable cause for the delay in filing the income-tax returns beyond November 30, 1973. However, the High Court disagreed, emphasizing that the penalty under section 271(1)(a) of the Act requires evidence of deliberate defiance of law or conscious disregard of obligations. The High Court noted that the Tribunal did not find the widow's explanation for the delay fanciful and there was no material indicating deliberate defiance or conscious disregard. Therefore, the High Court concluded that the Tribunal did not adopt the correct legal approach and was not justified in upholding the penalties.

Conclusion:

The High Court answered the reference in the negative and against the Revenue, stating that the Appellate Tribunal was not justified in upholding the penalties levied against the widow under section 271(1)(a) of the Income-tax Act for the assessment years 1972-73 and 1973-74. The judgment emphasized the quasi-criminal nature of penalty proceedings and the necessity of a judicial exercise of discretion considering all relevant circumstances.