1981 (10) TMI 27 - HC - Income Tax

Summary

Issues:
Calculation of penalty under section 271(1)(a) of the Income Tax Act, 1961 for assessment years 1965-66, 1968-69, and 1969-70 based on delay in filing returns of income and notices under sections 139 and 148.

Analysis:
The case involved a reference under section 256(1) of the Income Tax Act, 1961, made by the Income-tax Appellate Tribunal regarding the imposition of penalties under section 271(1)(a) for the assessment years 1965-66, 1968-69, and 1969-70. The primary question was whether the delay in filing returns of income should be considered only in relation to the notices under section 148 or also include the delay in submitting returns under section 139 during the original assessment proceedings. The Tribunal partly allowed the appeals by holding that the penalty should be based solely on the delay in response to notices under section 148, which was determined to be 10 months for each assessment year in question.

The Assessing Officer (AO) had initiated penalty proceedings under section 271(1)(a) after the assessee filed returns of income for the relevant years with a delay of 10 months in response to notices under section 148. However, the AO had also considered the delay in submitting returns under section 139 during the original assessment proceedings when imposing penalties. The Appellate Assistant Commissioner (AAC) upheld the penalty for the assessment year 1965-66 but reduced it for 1968-69 based on the delay found in the submission of returns of income. The Tribunal concurred that penalties should only be based on the delay in response to notices under section 148.

The Court emphasized that the provisions of section 271(1)(a) of the Act empower the AO to impose penalties when a person fails to furnish the return of total income as required under section 148 without reasonable cause. Therefore, the delay prior to the service of notices under section 148 should not be considered for penalty imposition. The Court distinguished a previous case cited by the department, highlighting the different circumstances where penalties were imposed for failure to furnish returns under section 139 and section 148.

In conclusion, the Court held that penalties under section 271(1)(a) for the assessment years in question should only be levied based on the delay in response to notices under section 148, excluding any delay in submitting returns under section 139 during the original assessment proceedings. The decision of the Income-tax Appellate Tribunal to consider a 10-month delay for penalty calculation was deemed legally justified. No costs were awarded in the case.