1993 (6) TMI 105 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(a) of the IT Act, 1961 based on delay in filing income tax return.

Analysis:
The appeal was filed against the order of CIT(A) confirming the penalty under section 271(1)(a) of the IT Act, 1961. The assessee filed the return late, leading to penalty proceedings. The assessee's contentions included filing extension applications, preoccupation due to search and seizure proceedings, and a change in the previous year from 12 to 15 months. The Assessing Officer rejected these contentions, stating there was no reasonable cause for the delay. The penalty was calculated at 2% of the net tax payable.

The assessee appealed to the CIT(A), arguing that the delay was due to late auditing of accounts. However, the CIT(A) upheld the penalty. The assessee then appealed to the Tribunal, reiterating the objections raised before the Revenue authorities.

The Tribunal considered various legal precedents, including cases where delay in audit completion was deemed a reasonable cause for late filing. It was noted that the rejection of extension applications alone does not justify a finding of delay without reasonable cause. The Tribunal also highlighted cases where delays due to audit completion were considered valid reasons for late submission of returns.

The Tribunal further analyzed the issue of an unauthorized person signing the return, citing legal precedents where genuine mistakes in signing returns were considered valid reasons for late filing. The Tribunal found that the change of auditors and consequential delay constituted a reasonable cause for the late filing, and the penalty was unjustified. The Tribunal distinguished the case from a precedent cited by the Departmental Representative, where specific income particulars were not received on time.

Ultimately, the Tribunal ruled in favor of the assessee, deleting the penalty. The Tribunal held that the reasons provided by the assessee, including the change of auditors, were valid and justified the delay in filing the return. The appeal of the assessee was allowed, overturning the penalty imposed by the Revenue authorities.