1983 (8) TMI 120 - AT - Income Tax

Summary

Issues:
- Imposition of penalty under section 271(1)(a) of the Income Tax Act, 1961 for delay in filing the return of income for the assessment year 1976-77.
- Appeal against the penalty imposed by the Income Tax Officer (ITO) and subsequent cancellation of the penalty by the Appellate Authority.

Analysis:
1. The case involved the imposition of a penalty under section 271(1)(a) of the Income Tax Act, 1961 on the assessee, a registered firm, for failing to file its return of income for the assessment year 1976-77 within the prescribed time limit. The Income Tax Officer (ITO) initiated penalty proceedings due to a delay of eight months in filing the return, attributing it to the Accountant's illness. The ITO imposed a penalty of Rs. 7,194 on the assessee for the delay.

2. The assessee appealed against the penalty before the Appellate Authority of Income Tax (AAC), arguing that the delay was justified as there was no response to their application for extension of time. The AAC accepted the assessee's argument and canceled the penalty, deeming the ITO's action unjustified and rough.

3. The Department appealed against the AAC's decision, contending that the delay was not adequately justified by the assessee. The Departmental Representative highlighted that the assessee failed to provide a reasonable cause for the delay in filing the return within the prescribed time limit.

4. The authorized representative for the assessee explained that the delay was due to the distance between the headquarters and the work site, which required time for compiling accounts. The representative argued that the applications for extension of time were not disallowed, leading the assessee to believe that the extension had been granted.

5. Upon considering the submissions and evidence presented, the Appellate Tribunal found that the assessee had successfully proven a reasonable cause for the delay in filing the return. The Tribunal noted discrepancies in the dates mentioned in the appellate order and confirmed that the return was filed on 29th April 1976, not 29th Sept 1976 as stated. The Tribunal concluded that the imposition of the penalty was unjustified and upheld the cancellation of the penalty by the AAC.

6. The Tribunal dismissed the Department's appeal, ruling that the imposition of the penalty was unwarranted given the circumstances and the timely filing of the return by the assessee. The Tribunal found no merit in the Department's arguments and upheld the decision to cancel the penalty.

In conclusion, the Appellate Tribunal dismissed the appeal, affirming the cancellation of the penalty imposed on the assessee for the delay in filing the return of income for the assessment year 1976-77.