1988 (2) TMI 118 - AT - Income Tax

Summary

Issues Involved:
1. Confirmation of penalty under section 271(1)(a) of the Income Tax Act, 1961.
2. Interpretation of the term "assessee tax" under section 271(1)(a).
3. Reasonable cause for delay in filing the return.
4. Applicability of penalty in cases where refund is claimed.

Issue-Wise Detailed Analysis:

1. Confirmation of penalty under section 271(1)(a) of the Income Tax Act, 1961:
The appellant challenged the order dated 27th April 1985, confirming the penalty of Rs. 30,186 under section 271(1)(a) of the Income Tax Act, 1961. The return of income was due on or before 30th September 1971 but was filed on 15th March 1974, resulting in a delay of 29 months. The Income Tax Officer (ITO) issued a show-cause notice and, after considering the assessee's explanation, imposed the penalty. The CIT(A) dismissed the appeal, stating that the penalty had to be levied with reference to the tax determined at the time of regular assessment.

2. Interpretation of the term "assessee tax" under section 271(1)(a):
The appellant argued that the term "tax" in the explanation to section 271(1)(a) refers to the tax on the returned income and not on the assessed income. The CIT(A) clarified that the term "assessee tax" refers to the tax determined on the basis of the regular assessment, not on the self-assessed tax. The Tribunal agreed with this interpretation, stating that the term "assessee tax" is clearly defined in the Act and does not admit any ambiguity.

3. Reasonable cause for delay in filing the return:
The appellant contended that the delay in filing the return was due to a bona fide belief that no tax was due based on the returned income, which would entitle the assessee to a refund. The Tribunal found no plausible reason for the low income declared in the return compared to the previous year. The appellant failed to establish a reasonable cause for the delay, and the Tribunal held that the penalty for late filing was rightly imposed and confirmed.

4. Applicability of penalty in cases where refund is claimed:
The appellant argued that since a refund was due, the return could be filed within two years, and no penalty should be imposed. The Tribunal rejected this argument, stating that the refund was to be determined with reference to the finally assessed tax, not the self-assessed tax. The Tribunal concluded that the appellant's approach was erroneous and did not constitute a reasonable cause for the delay in filing the return.

Conclusion:
The Tribunal upheld the penalty imposed under section 271(1)(a) of the Income Tax Act, 1961, confirming the CIT(A)'s order. The appeal was dismissed, and it was observed that the penalty should be computed with reference to the finally determined tax liability.