1986 (4) TMI 107 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty for late filing of income tax return.
2. Justification for the cancellation of penalty by the ld. AAC.
3. Appeal against the cancellation of penalty by the Revenue.

Detailed Analysis:
1. The judgment deals with the imposition of a penalty for the late filing of an income tax return by an individual assessee. The assessment was completed on a total income of Rs. 45,320, with the return due by July 31, 1972, but filed only on October 7, 1980. The penalty proceedings were initiated by the ld. ITO, considering the return late by 35 months. The penalty of Rs. 4,960 was imposed under section 271(1)(a) of the IT Act, 1961, despite the assessee's explanation that the delay was at most 14 months due to the complexity of tax laws and being an elderly individual. The ld. AAC later canceled the penalty, citing reasonable cause for the delay in filing the return.

2. The cancellation of the penalty by the ld. AAC was based on the argument presented by the assessee's advocate that the assessee, an elderly lady with an agricultural background, was unaware of tax laws. The advocate highlighted the family's lack of engagement in business activities, the sale of property in Lahore, and subsequent investments. The ld. AAC, after considering the facts and submissions, concluded that the penalty was unwarranted due to sufficient and reasonable cause preventing the timely filing of the return. This decision was based on the superior law courts' decisions and the specific circumstances of the case.

3. The Revenue filed an appeal against the cancellation of the penalty, arguing that the ld. AAC was not justified in deleting the penalty imposed under section 271(1)(a) of the IT Act, 1961. The Revenue's contention was supported by the Departmental Representative, who claimed there was no justification for the delay in filing the return and that the penalty should have been confirmed. The arguments presented by both sides were considered, leading to the conclusion that while there was no justification for the complete cancellation of the penalty, the delay period should be reduced to 13 months instead of the initial 35 months. The appeal was allowed to that extent, confirming the penalty but adjusting the delay period accordingly.