1990 (3) TMI 115 - AT - Income Tax

Assessment Proceedings, Charitable Trust, Late Filing, Penalty Notice, Penalty Proceedings, Reasonable Cause

Summary

Issues:
1. Penalty imposed under section 271(1)(a) for late submission of return.
2. Claim of exemption under section 10(22A) of the Income-tax Act.
3. Applicability of sub-section (3) of section 271 regarding penalty for failure to furnish the return.
4. Interpretation of clause (d) of sub-section (3) of section 271 concerning the maximum penalty.
5. Consideration of counsel's advice as a ground for condoning the delay.
6. Equity argument for charitable trust in penalty proceedings.

Analysis:
1. The appeal concerned a penalty imposed under section 271(1)(a) for the late submission of the return for the assessment year 1981-82. The Income-tax Officer initiated proceedings due to the return being filed 19 months late. Despite multiple opportunities, the assessee did not respond, leading to the imposition of a penalty. The Appellate Assistant Commissioner upheld the penalty, leading to the appeal before the ITAT Delhi-D.

2. The assessee claimed exemption under section 10(22A) of the Income-tax Act, arguing that their income was exempt. However, as per the record, the claim was not made during the assessment proceedings. The ITAT rejected this submission, stating that the claim should have been made during assessment for consideration, and it was too late to introduce it during penalty proceedings.

3. The assessee contended that no penalty could be levied under sub-section (3) of section 271 since their total income did not exceed the maximum amount not chargeable to tax. However, the ITAT found that the proviso to section 271(3) excluded cases where a return had to be filed under a specific section, as in the case of the trust, making the exemption inapplicable.

4. Regarding the interpretation of clause (d) of sub-section (3) of section 271, the ITAT explained that the clause's applicability was not relevant in the present case. The ITAT highlighted that the penalty for late submission of return and for concealment of income combined could not exceed twice the tax sought to be evaded, but in this case, only a penalty for late submission was imposed.

5. The counsel argued that the delay in filing the return was due to advice from previous counsel and auditors. However, the ITAT found no evidence to support this claim and noted that the counsel's advice was not presented timely or substantiated. The ITAT rejected this argument, emphasizing the lack of evidence.

6. Lastly, the ITAT addressed the equity argument for charitable trusts in penalty proceedings. Referring to legal principles, the ITAT emphasized that tax laws do not accommodate equity considerations and penalties are applicable as per the provisions. The ITAT dismissed the equity argument, upholding the penalty imposed on the charitable trust for late submission of the return.