1984 (5) TMI 21 - HC - Income Tax

Summary

Issues:
1. Interpretation of penalty under s. 9(a) of the Companies Profits (Surtax) Act, 1964 for delayed filing of return.
2. Whether the delay in filing the return was justified due to reasonable cause.
3. Assessment of penalty for late filing of the return.

Analysis:
The High Court was presented with a reference question under s. 256(2) of the I.T. Act, 1961, regarding the correctness of upholding the AAC's order canceling a penalty imposed by the ITO under s. 9(a) of the Companies Profits (Surtax) Act, 1964, for delayed filing of the return. The delay in filing the return beyond the due date of September 30, 1969, led to the imposition of a penalty of Rs. 1,02,765 by the ITO, which was subsequently canceled by the AAC and upheld by the ITAT. The Commissioner contended that the issue was a question of law, but the application was refused on the basis that the finding of reasonable cause for the delay was a question of fact and not law.

The legal ground relied upon by the AAC, following a judgment of the Calcutta High Court, was that there was no prescribed penalty for the late filing of a return under s. 9 of the Companies Profits (Surtax) Act, 1964. The Calcutta High Court judgment highlighted the distinction between penalties under the I.T. Act for failure to file a return and filing a return late, whereas under the Surtax Act, penalty could only be imposed for failure to file the return, not for filing it late. The Tribunal also considered the assessee's reasonable cause for the delay, stating that confusion regarding the calculation of chargeable profits and the minimal three-month delay did not warrant a harsh penalty of Rs. 1,02,765.

The High Court analyzed the facts of the case, noting that the assessee had initially filed an income tax return on time, leading to confusion regarding the necessity of filing a return under the Surtax Act due to the significant assessed loss. The Court concluded that the case was primarily based on findings of fact, and the absence of a provision for imposing a penalty for late return filing under the Surtax Act, as established by the Calcutta High Court judgment, rendered the legal question academic. Consequently, the application seeking a reference was dismissed.