1994 (2) TMI 116 - AT - Income Tax

Summary

Issues:
1. Imposition of penalty under section 140A(3) for non-payment of self-assessment tax before filing the return.
2. Dispute regarding the availability of funds and repatriation of income from abroad.
3. Interpretation of sections 139(1) and 140A in relation to the obligation to file a return and pay tax.

Analysis:
1. The appeal concerns the imposition of a penalty under section 140A(3) for the non-payment of self-assessment tax before filing the return. The assessee filed the return for the assessment year 1987-88 without paying the self-assessment tax, which was later paid after the return was filed. The Assessing Officer imposed a penalty under section 140A(3) for this non-payment, leading to a dispute that resulted in the appeal by the revenue against the cancellation of the penalty by the CIT(A).

2. The dispute also revolves around the availability of funds and the repatriation of income from abroad. The Assessing Officer contended that since the funds were available to the assessee in London, the delay in repatriation should not be a valid reason for non-payment of tax. However, the CIT(A) considered the explanation provided by the assessee, citing an agreement and a decision of the Foreign Exchange Regulation Appellate Board, which stated that the assessee became the lawful owner of the amount only in August 1987, justifying the delay in repatriation.

3. The interpretation of sections 139(1) and 140A is crucial in this case. Section 139(1) mandates the filing of a return when the total income exceeds the maximum amount not chargeable to tax. In this appeal, it was established that the assessee's income did not exceed the non-taxable limit. Section 140A imposes a penalty for non-payment of tax based on the return required to be furnished. The Tribunal analyzed the obligation to file a return and pay tax under these sections, concluding that since there was no obligation to file the return under section 139(1) due to the income not exceeding the non-taxable limit, the penalty under section 140A(3) was not justified.

In conclusion, the Tribunal upheld the decision of the CIT(A) and dismissed the appeal of the revenue, emphasizing the lack of obligation to file a return and pay tax under the circumstances presented in the case.