1996 (4) TMI 144 - AT - Income Tax

Summary

Issues involved:
1. Imposition of penalty under section 271(1)(a) of the Income-tax Act, 1961.
2. Reasonable cause for delay in filing returns.
3. Effect of charging interest under section 139(8) on the imposition of penalty under section 271(1)(a).

Issue-wise Detailed Analysis:

1. Imposition of penalty under section 271(1)(a) of the Income-tax Act, 1961:
The assessee contested the imposition of penalty under section 271(1)(a) for the assessment years 1969-70 and 1970-71. The delay in filing returns was 87 months and 83 months, respectively. The returns were filed in response to notices under section 148, well beyond the due dates specified under section 139(1) and section 139(4). The Income Tax Officer (ITO) imposed penalties of Rs. 33,227 and Rs. 4,263, which were partially upheld by the Commissioner (Appeals) for the assessment year 1969-70 and fully upheld for 1970-71.

2. Reasonable cause for delay in filing returns:
The assessee argued that a dispute regarding the ownership of Bungalow No. 15, which was part of the transaction, created uncertainty about the income received, thus constituting a reasonable cause for the delay. However, the Tribunal found that the assessee was a confirming party only for Bungalow No. 14, not involved in the litigation. The Tribunal concluded that the assessee had no reasonable cause for the delay, as the commission received was taxable and the litigation did not directly affect the income declared. The Tribunal agreed with the revenue's argument that the assessee's delay was a deliberate attempt to evade tax.

3. Effect of charging interest under section 139(8) on the imposition of penalty under section 271(1)(a):
The assessee contended that since interest was charged under section 139(8), no penalty should be imposed under section 271(1)(a), relying on the decisions in CIT v. M. Chandra Sekhar and Liberal Engg. Works v. CIT. The Tribunal distinguished these cases, noting that in both, the returns were filed within the time prescribed under section 139(4), unlike in the present case where returns were filed in response to section 148 notices, well beyond the section 139(4) limit. The Tribunal held that the decisions in M. Chandra Sekhar and Liberal Engg. Works were not applicable, and the ITO could not extend the time for filing returns beyond the statutory limit. The Tribunal also noted that the default in filing the return is a continuing default as per the Supreme Court's decision in Maya Rani Punj v. CIT.

Conclusion:
The Tribunal found no justification to interfere with the Commissioner (Appeals) order, upholding the penalties imposed under section 271(1)(a). The appeals were dismissed, affirming that the assessee had no reasonable cause for the delay and that the imposition of penalty was justified despite the charging of interest under section 139(8).