1990 (7) TMI 156 - AT - Income Tax

Summary

Issues: Penalty for delayed submission of return under section 271(1)(a)

In this case, the appellant appealed against the penalty of Rs. 2,49,552 imposed under section 271(1)(a) for delayed submission of the return. The return was due on 31-7-1979, but it was filed on 4-8-1981, resulting in a delay of 22 completed months. The appellant argued that the delay covered by the application seeking extension of time should be excluded from the penalty calculation. The appellant faced adverse circumstances, including a major heart attack, which caused delays in filing the return. The Assessing Officer and CIT(A) rejected these contentions, leading to the appeal.

The appellant contended that the delay period covered by the extension application should not be considered for penalty calculation. Additionally, the appellant argued that the period after the major heart attack should be excluded as well. The departmental representative highlighted that the appellant neglected their statutory duty by prioritizing professional work over filing the return.

The Tribunal considered the arguments and legal provisions. It agreed that the delay covered by the extension application should be excluded from the penalty calculation. However, it held that the period from 1-10-1979 to 24-1-1981, until the date of the heart attack, remained unexplained and should be considered for penalty quantification. The Tribunal acknowledged the reasonable time needed after a major heart attack to file the return but emphasized that this period fell chronologically at the end of the total delay, raising the question of whether the last part of the delay could be exempted from penalty.

The Tribunal referred to legal precedents, such as the Supreme Court's decision in Maya Rani Punj v. CIT, emphasizing that failure to file a return on time constitutes a continuing default. It also drew parallels with cases involving quantification of interest and penalty, highlighting the need to consider different factors for various parts of delay. The Tribunal analyzed the Bombay High Court decision in CWT v. S.N. Tarawia, which addressed the quantification of penalty for delays falling before and after a statutory change.

Ultimately, the Tribunal concluded that the penalty should be quantified for the unexplained delay period from 1-10-1979 to 24-1-1981, totaling 15 complete months. The exact penalty amount was to be determined by the Assessing Officer. The appeal was treated as partly allowed for statistical purposes.