1981 (10) TMI 63 - AT - Income Tax

Summary

Issues:
- Appeal by Revenue against levy of penalty u/s 271(1)(a)
- Validity of reasons for cancellation of penalties by AAC
- Assessee's plea of being under a bonafide impression regarding late filing
- Consideration of mens rea in penalty proceedings
- Delay in filing returns before and after notice u/s 148
- Assessment of reasonable cause for delay in filing returns
- Computation of penalty
- Decision on cross objections

Analysis:
The judgment pertains to three appeals filed by the Revenue challenging the levy of penalties under section 271(1)(a) for late filing of returns. The returns were filed late, and the due date for filing was 30th of June each year. The Income Tax Officer (ITO) initiated penalty proceedings, which were later cancelled by the Appellate Assistant Commissioner (AAC), leading to the Revenue's appeals before the Tribunal. The assessee contended that the late filing was due to a bonafide impression that the returns were filed by their lawyer, a plea contested by the Revenue.

The Revenue argued that the AAC wrongly accepted the assessee's plea and that there was no proper explanation for the delays in filing returns even after notice u/s 148. The assessee's counsel reiterated their contentions, emphasizing the reasonableness of the cause for delay and the absence of mens rea. The Tribunal addressed the issue of mens rea in penalty proceedings, highlighting the need to consider all facts and circumstances before deciding on the levy of penalties.

Regarding the delay in filing returns, the Tribunal divided the analysis into two parts: before and after the notice u/s 148. The Tribunal accepted the assessee's plea of being under a bonafide impression until the receipt of notices in November 1976, finding reasonable cause for the delay. However, for the subsequent delay after the notices, the Tribunal found the assessee's reasons insufficient and held them liable for penalties for that period under section 271(1)(a).

The Tribunal dismissed the cross objections filed by the assessee, stating that since the computation of penalties was directed for the period of default, no further direction was necessary. In conclusion, the appeals filed by the Revenue were allowed in part, and the cross objections by the assessee were dismissed, leading to a recalculated penalty for the default period.