1980 (2) TMI 113 - AT - Income Tax

Issues Involved:

1. Penalty for late filing of return under Section 271(1)(a) for the year 1973-74.
2. Addition of Rs. 44,456 in trading results for the year 1974-75.
3. Disallowance of shop expenses, car expenses, depreciation on car, and traveling expenses for the year 1974-75.
4. Charging of interest under Section 139(8) for the year 1974-75.
5. Interest under Section 139(8) and Section 215 for the year 1975-76.

Issue-wise Detailed Analysis:

1. Penalty for Late Filing of Return under Section 271(1)(a) for the Year 1973-74:

The Department appealed against the AAC's deletion of a Rs. 3,380 penalty for late filing of the return. The return was due on 15th Aug., 1973, but filed on 15th Feb., 1974. The assessee requested extensions due to the accountant's illness and a family tragedy involving the kidnapping and murder of a partner's minor son. The ITO was not satisfied with these reasons and levied the penalty. The AAC found the penalty unjustified, noting the serious illness and death of the accountant and the family calamity as valid reasons for the delay. Additionally, the AAC observed that the ITO did not address the assessee's explanations in his penalty order. The Tribunal upheld the AAC's decision, emphasizing the lack of reasoning in the ITO's order and the valid causes presented by the assessee.

2. Addition of Rs. 44,456 in Trading Results for the Year 1974-75:

The Department contested the AAC's deletion of an addition of Rs. 44,546 (Rs. 17,146 in the head office and Rs. 27,400 in the branch). The ITO applied a 20% profit rate, rejecting the assessee's disclosed rates of 18.48% and 17.56%, citing the lack of quantitative details and a constant profit margin over three years. The AAC found the disclosed rates reasonable and consistent with past results, noting the impracticality of maintaining quantitative details for about 10,000 items. The Tribunal upheld the AAC's decision, agreeing that the disclosed profit rates were reasonable and comparable to past years, and recognizing the difficulty in maintaining quantitative details for the nature of the business.

3. Disallowance of Shop Expenses, Car Expenses, Depreciation on Car, and Traveling Expenses for the Year 1974-75:

The assessee appealed against disallowances made by the ITO. The Tribunal considered past decisions and submissions, noting that similar disallowances were deleted in subsequent years. The Tribunal adjusted the disallowances: car expenses and depreciation on the car were limited to 1/6th, and traveling expenses were disallowed at 1/10th. Other disallowances were deleted.

4. Charging of Interest under Section 139(8) for the Year 1974-75:

The assessee contested the charging of Rs. 1,785 interest under Section 139(8). The Tribunal noted that there was no order or direction for the levy of interest in the assessment order, referencing a similar decision by the Delhi Bench 'D' of the Tribunal. Consequently, the interest was deleted.

5. Interest under Section 139(8) and Section 215 for the Year 1975-76:

The assessee's appeal regarding the incorrect calculation of interest under Sections 139(8) and 215 was dismissed as not maintainable. The Tribunal cited precedents indicating that objections against the charge of interest under Section 139(8) could only be considered if there were other grounds of appeal.

Conclusion:

In the result, the Department's two appeals (ITA Nos. 2822/Del/78-79 and 532/Del/78-79) were dismissed. Out of the two appeals of the assessee, one (ITA No. 420/Del/78-79) was partly allowed, and the other (ITA No. 1703/Del/79) was dismissed.

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