1985 (5) TMI 43 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the imposition of a penalty under section 271(1)(a) of the Income Tax Act, 1961 for the assessment year 1963-64 due to the belated filing of the return of income by the assessee.

Imposition of Penalty:
The Income Tax Officer (ITO) imposed a penalty of Rs. 52,148 under section 271(1)(a) for the failure to furnish the return under sections 139(1) and 139(2) of the Income Tax Act, 1961, as the return was filed on January 2, 1965, instead of the due date of June 30, 1963. The ITO rejected the reasons provided by the assessee for the delay and noted that no application for extension of time had been made.

Appeal Before AAC:
The assessee appealed before the Appellate Assistant Commissioner (AAC) who found that there was a reasonable cause for the belated filing of the return, except for a three-month period. The AAC also noted that as there was no outstanding tax on the date of penalty imposition, relying on a previous judgment, the penalty was not leviable under section 271(1)(a).

Tribunal's Decision:
The Department appealed before the Tribunal, which upheld the AAC's decision based on the judgment in the case of Vegetable Products Ltd. The Tribunal found that since no tax was payable on the date of penalty imposition, the penalty could not be imposed. It was also established that the assessee had a reasonable cause for the delay in filing the return, as the audit for the relevant year was completed in September 1964.

Questions of Law:
The High Court considered two questions of law: whether the penalty was imposable when no tax was payable on the date of penalty imposition, and whether the assessee had a reasonable cause for the delay in filing the return.

Court's Decision:
The High Court held that based on the facts and circumstances, there was a reasonable cause for the delay in filing the return up to September 1964. The Court agreed with the Tribunal's decision that the delay was explained due to the completion of the audit in September 1964. The first question was answered in the negative, favoring the Revenue, while the second question was answered in the affirmative, favoring the assessee.

Conclusion:
The High Court affirmed the Tribunal's decision, stating that there was a reasonable cause for the delay in filing the return, and therefore, no penalty was imposable. The judgment was delivered by Judges Dipak Kumar Sen and Ajit Kumar Sengupta.