1990 (10) TMI 96 - AT - Income Tax

Summary

Issues:
- Imposition of penalty under section 271(1)(a) of the Income Tax Act, 1961 for delay in filing the return for the assessment year 1982-83.
- Consideration of reasons for delay in filing the return.
- Failure of the Income Tax Officer (ITO) to consider the reply filed by the assessee.
- Applicability of legal principles regarding the consideration of assessee's explanation in penalty proceedings.

Analysis:

The appeal before the Appellate Tribunal ITAT Ahmedabad concerned the imposition of a penalty under section 271(1)(a) of the Income Tax Act, 1961, for the delay in filing the return for the assessment year 1982-83. The penalty was initially imposed by the ITO and confirmed at a reduced amount by the AAC. The assessee contended that there were valid reasons for the delay in filing the return, including the inability to obtain timely information about income from an Association of Persons (AOP). The AAC found reasonable cause for the delay up to a certain date but not for the entire period, leading to a reduction in the penalty amount to Rs. 3,800.

The representative of the assessee argued that the ITO failed to consider the reply filed by the assessee, which should render the penalty order void. However, the Tribunal held that any irregularity during the proceedings would not nullify the entire penalty proceedings. Citing legal precedents, including a Kerala High Court decision and a Supreme Court case, the Tribunal emphasized that the failure to consider the assessee's explanation does not invalidate the penalty order ab initio. The Tribunal noted that the matter could be remanded to the ITO for considering the reply if necessary.

In the present case, the Tribunal found that it was not essential to remand the matter to the ITO as the explanation provided by the assessee had been considered by the AAC and was being reviewed again. The Tribunal assessed the reasons for the delay, noting that while there was a reasonable cause for some months after a specific date, it did not apply to the entire period of delay. Taking into account all relevant factors, the Tribunal reduced the penalty further to Rs. 1,500, considering it to be just and fair based on the circumstances presented.

Ultimately, the Tribunal partially allowed the appeal, reducing the penalty amount imposed on the assessee for the delay in filing the return for the assessment year 1982-83.