1989 (5) TMI 119 - AT - Income Tax

Account Books Assessment Year Delay In Filing Return Late Filing Penalty Proceedings Settlement Commission

Summary

Issues:
1. Cancellation of penalty order by CIT(A) based on the demise of the Managing Partner as a reason for delay in filing the return.
2. Whether the delay in filing the return for the assessment year 1981-82 was justified due to circumstances beyond the control of the assessee-firm.
3. Whether the Settlement Commission's pending determination for earlier years affected the filing of a correct return for the assessment year in question.

Detailed Analysis:
1. The departmental appeal was against the cancellation of a penalty order by the CIT(A) for the assessment year 1981-82. The Managing Partner's death was cited as the reason for the delay in filing the return. The Income-tax Officer imposed a penalty of Rs. 4,572, finding no sufficient cause for the delay beyond a certain date. The CIT(A) deleted the penalty solely based on the demise of the Managing Partner, leading to the second appeal by the department.

2. The assessee-firm, an old firm, faced challenges after the sudden death of the Managing Partner, who handled all affairs. The firm approached the Settlement Commission for earlier years, pending a determination that affected filing the return for the assessment year in question. The advocate argued that the delay was justified due to the circumstances and lack of training for the other partners to handle the firm's affairs. Legal arguments were presented based on previous court decisions supporting the contention that the delay was reasonable given the situation.

3. The Tribunal considered the facts presented by the advocate, emphasizing the importance of the Settlement Commission's pending orders for earlier years in accurately filing the return for the assessment year 1981-82. The Tribunal accepted that the delay was justifiable considering the circumstances, including the seized account books and the need for accurate financial information from the Settlement Commission. The Tribunal concluded that there was no delay warranting a penalty under section 271(1)(a) and dismissed the appeal, affirming the CIT(A)'s decision to cancel the penalty based on the reasons presented.