1992 (1) TMI 167 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the Income Tax Return.
2. Non-disclosure of Annual Letting Value (ALV) of property.
3. Adjustment of loss from the previous assessment year.
4. Validity of penalty proceedings under section 271(1)(a).

Detailed Analysis:

1. Delay in Filing the Income Tax Return:
The assessee's IT return for the assessment year 1982-83 was due by 31st July 1982 but was filed on 6th February 1985. The ITO issued a notice under section 148 on 29th June 1984, served on 5th July 1984, and the assessee filed the computation of income on 6th February 1985. The Tribunal noted that the delay in filing the return was due to the assessee's bona fide belief that her income did not exceed the taxable limit, considering the losses and non-disclosure of ALV.

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 her return. The ITO included Rs. 12,000 as notional income for the property, following the Calcutta High Court decision in CIT vs. Ganga Properties Ltd., which mandates that the legal owner must disclose ALV. The Tribunal, however, applied the Madras High Court decision in M.P. Jnanamba vs. CIT, stating that the assessee's belief that she need not show ALV due to her inability to realize any rent was bona fide and had reasonable cause.

3. Adjustment of Loss from the Previous Assessment Year:
The assessee claimed a loss of Rs. 18,359 from the assessment year 1980-81, which the ITO did not consider. The Tribunal noted that the assessee had filed her return for the assessment year 1980-81, but the ITO did not determine the loss. The Tribunal held that the claim of loss was bona fide and should not be penalized, referencing the Allahabad High Court decision in Budhar Singh & Sons vs. CIT, which emphasizes that a finding in assessment proceedings does not determine reasonable cause in penalty proceedings.

4. Validity of Penalty Proceedings under Section 271(1)(a):
The Tribunal concluded that no penalty under section 271(1)(a) was exigible. It emphasized that penalty proceedings are separate from assessment proceedings and require independent evaluation of reasonable cause. The Tribunal determined that the assessee had reasonable cause for the delay in filing the return and for her claims regarding ALV and loss, thus no deliberate omission or mala fide intent was found.

Conclusion:
The Tribunal allowed the appeal, holding that the assessee had reasonable cause for the delayed filing of the return and the non-disclosure of ALV, and that her claim of loss was bona fide. Consequently, no penalty under section 271(1)(a) was warranted for the assessment year 1982-83.