1992 (8) TMI 106 - AT - Income Tax

Summary

Issues Involved:
1. Penalties under Section 271(1)(a) of the Income-tax Act, 1961 for late filing of returns.
2. Validity and timing of filing returns under Section 139(4) and Section 148 of the Act.
3. Reasonable cause for delay in filing returns.
4. Applicability of mens rea in penalty proceedings.
5. Calculation and reduction of penalties based on assessed tax and amendments to the Act.

Detailed Analysis:

1. Penalties under Section 271(1)(a) of the Income-tax Act, 1961 for late filing of returns:
The assessee was penalized for failing to file income tax returns on time for the assessment years 1969-70 to 1979-80. The penalties were confirmed by the Deputy Commissioner of Income Tax (Appeals) [DCIT(A)] and upheld by the Tribunal. The penalties were levied for various amounts, aggregating to Rs. 1,56,860 for the periods of delay after the due dates for filing the voluntary returns.

2. Validity and timing of filing returns under Section 139(4) and Section 148 of the Act:
The assessee argued that the returns were filed within the permissible period under Section 139(4), which allowed filing within two years from the end of the assessment year. The Tribunal noted that after this period, any returns filed would be invalid unless revived by a notice under Section 148. The Tribunal observed that the default continues until the return is filed or the assessment is completed, and the period of default could be mitigated by reasonable cause.

3. Reasonable cause for delay in filing returns:
The assessee claimed a bona fide belief that he was not required to file returns as his income was solely from salary, from which tax was deducted at source. The Tribunal rejected this contention, noting that the assessee had other taxable income and had filed returns declaring positive income and paid self-assessment tax. Therefore, the belief did not constitute a reasonable cause for the delay.

4. Applicability of mens rea in penalty proceedings:
The Tribunal referred to the Supreme Court decision in Gujarat Travancore Agency v. CIT, which held that the rule of mens rea does not apply to penalty proceedings under Section 271(1)(a). The Tribunal clarified that the absence of reasonable cause, not the presence of mens rea, is the relevant criterion for levying penalties. The assessee's claim of a bona fide belief was not accepted as a reasonable cause.

5. Calculation and reduction of penalties based on assessed tax and amendments to the Act:
The Tribunal discussed the amendments to Section 271(1)(a) and the relevant provisions of Section 139(4). It was noted that for assessment years 1969-70 to 1973-74, the maximum penalty could be 50% of the assessed tax due to the law before the amendment effective from 1-4-1976. For assessment year 1974-75, penalties were calculated at 2% per month of delay, totaling 66% for 33 months. The Tribunal directed the penalties to be reduced in accordance with the ultimate reduction in assessed tax following the Tribunal's order.

Conclusion:
The appeals for assessment years 1969-70 to 1974-75 were partly allowed, with penalties reduced based on the specified calculations. The appeals for assessment years 1975-76 to 1979-80 were dismissed, upholding the penalties as levied. The Tribunal emphasized the importance of filing returns within the prescribed period and the lack of reasonable cause for delays in the assessee's case.