1979 (1) TMI 125 - AT - Income Tax

Summary

Issues:
- Confirmation of penalty under s. 271(1)(a) for delay in furnishing returns for asst. yrs. 1970-71 and 1971-72.
- Whether penalties imposed on the assessee were justified.
- Bona fide belief of the assessee regarding filing of returns and liability to tax.
- Consideration of conduct of the assessee for imposition of penalties.

Analysis:
The Appellate Tribunal, ITAT Chandigarh, heard two appeals by the assessee against penalties imposed under s. 271(1)(a) for delay in furnishing returns for the asst. yrs. 1970-71 and 1971-72. The assessee explained that returns were filed late due to a bona fide belief that returns were due only after receiving notice under s. 139(2). The Income Tax Officer (ITO) imposed penalties despite the explanation. The Appellate Assistant Commissioner (AAC) upheld the penalties, leading to the appeals before the Tribunal.

The assessee contended that the returns were filed voluntarily for multiple assessment years simultaneously, indicating the bona fides of the assessee. The counsel argued that the delay was not intentional and that the penalties should be revoked. The Tribunal considered the submissions and observed that the income assessed matched the income returned by the assessee, supporting the claim of a genuine belief regarding tax liability. The Tribunal noted that the delay was due to a mistaken belief rather than a deliberate act of non-compliance.

The Revenue opposed the assessee's submissions, arguing that the conduct of the assessee did not reflect a bona fide belief regarding tax liability. They relied on a judgment to support their stance. However, the Tribunal found no grounds for penalty imposition. It emphasized that the delay in filing returns was due to a genuine belief held by the assessee, which was later rectified upon advice from a Tax Adviser. The Tribunal concluded that the penalties were unjustified and canceled them, allowing both appeals in favor of the assessee.

In essence, the Tribunal recognized the assessee's genuine belief regarding tax liability as the reason for the delayed filing of returns. The judgment highlighted that penalties should be imposed for conscious violations of the law, which was not the case here. The Tribunal's decision to cancel the penalties was based on the assessee's bona fide belief and lack of intentional non-compliance with tax regulations.