1983 (10) TMI 105 - AT - Income Tax

Summary

Issues:
Dispute regarding the levy of penalty under section 271(1)(a) of the Income-tax Act, 1961.

Analysis:
The judgment involves the appeal of an assessee disputing the penalty imposed under section 271(1)(a) of the Income-tax Act, 1961. The background of the case reveals that the penalty proceedings were initiated due to the late filing of the income tax return for the assessment year 1975-76. The penalty order was passed by the Income Tax Officer (ITO) on 25-3-1981, levying a penalty of Rs. 24,272, which was later confirmed at Rs. 18,962 by the Appellate Authority. The assessee contended that the delay in filing the return was due to serious differences between the partners, leading to the dissolution of the firm. The counsel for the assessee argued that one of the partners, who was responsible for filing the return, did not do so on time. The departmental representative, on the other hand, supported the penalty and disputed the contentions raised by the assessee.

The Tribunal considered the submissions from both sides and examined the evidence presented. The affidavit by one of the partners stated the reasons for the delay in filing the return, attributing it to the dissolution of the firm and the partner responsible for filing not fulfilling the obligation. Additionally, a certificate regarding the dehiring of the premises by the firm further supported the claim of dissolution. The Tribunal noted that the notice fixing the penalty date was allegedly served on the assessee, but no concrete evidence was provided to confirm the service. The Tribunal also highlighted the delay in passing the penalty order, which was over a year after the notice date, without granting a fresh opportunity for the assessee to present their case.

Furthermore, the Tribunal referred to legal precedents, including decisions from various High Courts, supporting the requirement for a show-cause notice and a personal hearing before levying a penalty. The Tribunal emphasized that the penalty order was passed without providing a further opportunity for the assessee to present arguments, as mandated by law. Considering these factors, the Tribunal concluded that the penalty imposed could not be sustained and decided to cancel the penalty. The Tribunal also addressed the argument regarding the service of the notice, emphasizing the necessity for proper service procedures to validate the penalty imposition. Ultimately, the Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(a) of the Income-tax Act, 1961.