1992 (1) TMI 164 - AT - Income Tax

Issues Involved:
1. Delay in filing Income-tax return for assessment year 1982-83.
2. Non-disclosure of Annual Letting Value (ALV) of property.
3. Adjustment of loss from assessment year 1980-81.
4. Validity of penalty under section 271(1)(a).

Issue-wise Detailed Analysis:

1. Delay in Filing Income-tax Return for Assessment Year 1982-83:
The assessee filed the return on 6-2-1985, whereas it was due on or before 31-7-1982. The Income-tax Officer (ITO) issued a notice under section 148 on 29-6-1984, which was served on the assessee on 5-7-1984. The assessee responded by filing the computation of income on 6-2-1985, disclosing a total income of Rs. 1,351. The ITO completed the assessment on 29-11-1985, computing the total income at Rs. 31,710, including Rs. 12,000 as notional income from the property at 17/6 Mathura Road, Faridabad. The assessee argued that if the loss of Rs. 18,359 from assessment year 1980-81 and the notional income of Rs. 12,000 were excluded, the total income would be Rs. 1,351, which is below the taxable limit, thus negating the obligation to file a return.

2. Non-disclosure of Annual Letting Value (ALV) of Property:
The assessee did not disclose the ALV of her property at 17/6 Mathura Road, Faridabad, in the return. The ITO included Rs. 12,000 as the notional income from this property, despite the assessee having sold it to M/s. Jagjit Engineering Works (P.) Ltd. on 6-7-1980. The ITO held that since no registered sale deed was executed, the assessee remained the legal owner and was obliged to disclose the ALV and pay tax on the notional income. The Tribunal referenced the Calcutta High Court decision in CIT v. Ganga Properties Ltd., which upheld the obligation of the legal owner to disclose property income.

3. Adjustment of Loss from Assessment Year 1980-81:
The assessee claimed a loss of Rs. 18,359 from the assessment year 1980-81. The ITO did not consider this loss in the assessment. The assessee had filed a return for the assessment year 1980-81 on 16-2-1981, showing a property income of Rs. 10,438 and a loss of Rs. 21,794 from her share in partnerships, resulting in a total loss of Rs. 18,359. The ITO issued a notice under section 148 for assessment year 1980-81, and an ex parte assessment was made, determining the income at Rs. 11,000. The Tribunal later set aside this reassessment, stating that the reopening under section 148 was not valid since no action was taken on the original return.

4. Validity of Penalty under Section 271(1)(a):
The assessee argued that penalty proceedings are separate from assessment proceedings and relied on the Madras High Court decision in M. P. Gnanambal Ammal v. CIT, which held that the legal ownership alone does not necessitate the inclusion of ALV if the property is not yielding rent to the owner. The Tribunal agreed, stating that the assessee had a bona fide belief that she was not liable to disclose the ALV since she was not in possession of the property and had received the full sale consideration. The Tribunal also referenced the Allahabad High Court decision in Budhar Singh & Sons v. CIT, which emphasized that reasonable cause for delay in filing returns should be determined independently in penalty proceedings. The Tribunal concluded that the assessee's claim of loss for assessment year 1980-81 was bona fide, and no penalty under section 271(1)(a) was exigible.

Conclusion:
The Tribunal allowed the appeal, holding that no penalty under section 271(1)(a) was exigible from the assessee for assessment year 1982-83.

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