1977 (11) TMI 80 - AT - Income Tax

Summary

Issues:
- Confirmation of penalty under section 140A(3) of the IT Act, 1961 by the Appellate Tribunal ITAT DELHI-E for the assessment year 1975-76.

Detailed Analysis:

1. The main issue in this appeal was the confirmation of a penalty of Rs. 9,200 imposed by the Income Tax Officer (ITO) under section 140A(3) of the IT Act, 1961. The appellant, a private limited company engaged in the wine business, had filed a return showing an income of Rs. 3,02,410 and had deposited advance tax of Rs. 21,950. However, the balance tax of Rs. 1,84,444 was not paid within 30 days of filing the return. The appellant cited paucity of funds as the reason for the delay, relying on legal precedents. The ITO imposed the penalty, which was upheld by the Appellate Assistant Commissioner (AAC).

2. The appellant's representative argued that the tax under section 140A had been paid on various dates, demonstrating an effort to meet the tax liability. Bank passbooks and cash books were presented to show the company's overdraft situation and lack of sufficient cash to pay the tax within the stipulated period. The appellant maintained that the non-payment was due to genuine difficulties and not intentional non-compliance.

3. On the other hand, the Departmental Representative contended that the mere fact of subsequent payments under section 140A did not absolve the appellant from the penalty, as the initial tax deposit was delayed. It was argued that the appellant could have used the available overdraft facility to meet the tax liability within the required timeframe, and the shortage of funds was not a valid reason for non-compliance.

4. The Appellate Tribunal reviewed the bank accounts and cash book and found merit in the appellant's explanation. It noted that the overdraft facility was not unlimited, and the appellant had made efforts to pay the entire tax due within three months of the initial deadline. Considering the circumstances, the Tribunal accepted the appellant's reasoning as a reasonable cause for the delay and decided to delete the penalty, granting relief to the appellant.

5. Ultimately, the Appellate Tribunal allowed the appeal, overturning the decision to impose the penalty under section 140A(3) of the IT Act, 1961 for the assessment year 1975-76.