2014 (8) TMI 646 - HC - Income Tax

Penalty u/s 271(1)(a) reasonable cause for late filing of return Held that - Assessee in their reply to the notice for penalty had referred to the return for the AY 1983-84 and the fact that the original return was filed taking into account payment received from DDA - this cannot be a ground for not filing the return for the AY 1984-85, specially, when the return for the AY 1983-84 was originally filed on 29th October, 1984 and the revised return was filed on 1st November, 1985 - the return for the assessment year 1984-85 was filed on 2nd July, 1986. The appellant-assessee had the opportunity to file Form No.6, which was applicable and could have given reasons for delay and belated filing of the return - The return could have been initially filed and then revised - For claiming loss, it was necessary for an assessee to file original return within the stipulated time - the assessee by not filing the return did not want benefit of carry forward of loss. Relying upon Gujarat Travancore Agency Vs. C.I.T 1989 (5) TMI 1 - SUPREME Court - question of mens rea does not arise or require consideration when we examine the question of penalty u/s 271 (1)(a) of the Act - Penalty is a civil liability and is imposed upon infraction of law when conditions stipulated in the provision are satisfied - Mens rea is not an requirement to impose penalty under Section 271(1)(a) of the Act - As far as the factum that the return was delayed, the same is accepted and is not in dispute - Justification and cause for the delay is the issue in dispute - Facts of the present case and excuse given by the appellant has been noticed and rejected Decided against Assessee.

Summary

Issues:
Impugned imposition of penalty under section 271(1)(a) of the Income Tax Act,1961 for late filing of return in relation to assessment year 1984-85.

Analysis:

1. The appellant-assessee, a partnership firm, was a government contractor during the relevant period. The return for the assessment year 1984-85 was due by 31st July, 1984, but was filed belatedly after 23 months on 2nd July, 1986. The Assessing Officer imposed a penalty for the delay, which was affirmed by the Commissioner of Income Tax (Appeals). The appellant argued that they were in a dilemma regarding the treatment of the amount received from the DDA, but the Tribunal upheld the penalty, stating that the delay was unjustified for a class A government contractor required to maintain accounts diligently.

2. The appellant-assessee contended that they revised the return for the previous assessment year 1983-84 due to losses incurred in the Asian Games Project, leading to confusion in filing the return for 1984-85. However, the court found that the reasons given did not justify the significant delay in filing the return for 1984-85. The court noted that the appellant's claim of being in a dilemma was not substantiated, especially considering they had filed the return for the previous year despite similar circumstances.

3. The appellant argued that excluding the amount received from the DDA would result in a refund, but the court dismissed this argument as speculative. The court emphasized that the appellant's method of accounting required the inclusion of the amount in the return, leading to a shortfall in self-assessment tax paid. The court also raised doubts about whether the TDS amount included deductions on the DDA payment.

4. The appellant relied on a previous court decision regarding violation of natural justice in penalty proceedings, but the court found no evidence of legal advice causing the delay in filing the return. The court highlighted that the appellant had the opportunity to provide reasons for the delay but failed to do so adequately. Additionally, the court clarified that mens rea is not necessary for imposing a penalty under Section 271(1)(a) of the Act.

5. The court distinguished previous cases where penalties were reduced based on specific circumstances, noting that the appellant's excuses were not valid in the present case. Ultimately, the court held against the appellant, upholding the penalty imposed by the Tribunal for the late filing of the return for the assessment year 1984-85. The appeal was dismissed without costs.