1984 (9) TMI 80 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271(1)(a) cancelled by the AAC.
2. Reasonable cause for delayed submission of return.
3. Discrepancy in the assessee's explanation regarding the departure of the Munim.

Analysis:
The appeal before the Appellate Tribunal ITAT ALLAHABAD-A concerned the cancellation of a penalty levied under section 271(1)(a) by the Income Tax Officer (ITO), which was subsequently annulled by the Additional Commissioner of Income Tax (AAC). The penalty was imposed due to delayed submission of the return, with the ITO initiating proceedings under section 271(1)(a) after the assessee failed to file the return on time. The assessee attributed the delay to the sudden departure of their accountant, the Munim, without proper intimation, which hindered the finalization of accounts and the timely filing of the return. The ITO, however, disregarded this explanation and imposed a penalty of Rs. 3,317.

Upon appeal to the AAC, the assessee reiterated the same contentions regarding the departure of the Munim and the subsequent difficulties faced in finalizing the accounts and filing the return. The AAC, after considering the arguments, found merit in the assessee's submission, emphasizing the reasonable cause for the delay in filing the return. The AAC noted that the Munim had taken away relevant books of account, causing a delay of 1 and 1/2 years in finalizing the accounts. The AAC concluded that there was no intentional default on the part of the assessee and hence canceled the penalty imposed by the ITO.

During the Tribunal proceedings, the Departmental representative argued that the assessee failed to provide conclusive proof that the departure of the Munim was the reason for the delay in finalizing the accounts and filing the return. It was contended that the assessee's varying explanations to different authorities raised doubts about the validity of the claimed reason. However, upon reviewing the penalty order and the facts on record, the Tribunal found that the assessee's application for an extension of time for filing the return supported the claim of difficulties arising from the sudden departure of the accountant. The Tribunal held that the absence of the Munim could have caused inconvenience in finalizing the accounts, justifying the delayed submission of the return.

Ultimately, the Tribunal dismissed the Departmental appeal, upholding the decision of the AAC to cancel the penalty. The Tribunal's decision was based on the finding that there was a reasonable cause for the delayed submission of the return, stemming from the unforeseen departure of the accountant and the resulting challenges in finalizing the accounts within the stipulated time frame.