1989 (5) TMI 83 - AT - Income Tax

Summary

Issues:
1. Validity of penalty under section 271(1)(a) for failure to comply with statutory obligations as per section 139(9)(f) of the Income-tax Act, 1961.

Comprehensive Analysis:
The judgment pertains to an appeal against the cancellation of a penalty levied by the Income Tax Officer (ITO) under section 271(1)(a) of the Income-tax Act, 1961 for the assessment year 1981-82. The Appellate Assistant Commissioner had canceled the penalty of Rs. 4,503, citing that the assessee, a truck owner, had failed to comply with the statutory obligation as provided in clause (f) of Explanation to section 139(9) of the Act, rendering the return invalid. The primary issue in contention was whether the penalty was rightfully levied based on the non-compliance of the assessee with the statutory requirements outlined in section 139(9)(f) of the Act.

The assessee had filed the return on an estimate basis, declaring an income of Rs. 9,000 in response to a notice under section 139(2) of the Act. The ITO subsequently identified the returns for the assessment years 1981-82 and 1982-83 as defective under section 139(9)(f) due to the lack of essential information such as gross receipts, gross profit, expenses incurred, and other details necessary for computation of income. Despite multiple communications from the ITO urging compliance, the assessee claimed a lack of information and failed to furnish the required details.

The ITO proceeded to frame the assessment on an estimate basis, considering the income from five trucks based on the previous year's assessment. Subsequently, a penalty of Rs. 4,503 was imposed under section 271(1)(a) for treating the return as invalid. However, the Appellate Assistant Commissioner overturned the penalty, reasoning that in a "no accounts case," where the assessee did not maintain account books, pressing for information not available with the assessee was unjustified. The AAC also noted the ambiguity regarding the specific information withheld by the assessee.

During the appeal, the Revenue argued that the assessee should have possessed the required information and contended that the penalty was justified. In contrast, the respondent's advocate highlighted the consistency in the assessment pattern across years and the absence of any additions related to the missing information, questioning the basis for the penalty imposition.

The Tribunal upheld the AAC's decision to lift the penalty, emphasizing that the ITO's resort to simple estimates and the absence of additions despite non-furnishing of information indicated that the assessee genuinely lacked the necessary details, especially considering that the provisions of section 44AA mandating account maintenance were not applicable. The judgment concluded by dismissing the appeal, affirming the cancellation of the penalty under section 271(1)(a) for the assessment year 1981-82.