1980 (8) TMI 122 - AT - Income Tax

Summary

Issues:
Reduction of penalty under section 271(1)(a) of the IT Act, 1961 by the Appellate Tribunal ITAT Indore for delay in filing the return of income for the assessment year 1974-75.

Analysis:

1. Facts and Background:
The appeal by the revenue was against the order of the AAC of IT, Bhopal, reducing the penalty levied by the ITO under section 271(1)(a) of the IT Act, 1961 for delay in filing the return of income for the assessment year 1974-75 from five months to one month.

2. Grounds for Penalty Initiation:
The assessee, a partner in a firm, filed the return after the due date, citing a delay due to non-intimation of share income by the firm. The ITO initiated penalty proceedings under section 271(1)(a) for the delay, rejecting the assessee's explanation and levying a penalty.

3. Arguments Before the AAC:
The assessee's counsel argued before the AAC that the delay was due to the firm not communicating the share income, leading to a reasonable cause for the delay. The AAC accepted this explanation, citing previous decisions supporting the assessee's position.

4. Tribunal's Decision:
The Tribunal upheld the AAC's order, finding no fault in reducing the penalty. It noted that the return was filed when the firm provided the share income, and the delay was justified due to the lack of communication from the firm. The Tribunal emphasized that the assessee had applied for an extension of time, which should have been considered despite being slightly late.

5. Legal Precedents and Reasoning:
The Tribunal referenced decisions by the Mysore and Orissa High Courts, supporting the view that a partner's inability to finalize the return due to lack of share income communication constitutes a reasonable cause for delay. The Tribunal concluded that the absence of communication from the ITO allowed the assessee to believe the extension had been granted, further justifying the delay.

6. Final Verdict:
The Tribunal dismissed the revenue's appeal, affirming the reduction of the penalty to one month's delay. The decision was based on the reasonable cause for the delay in filing the return, as supported by legal precedents and the circumstances of the case.

In conclusion, the Appellate Tribunal ITAT Indore upheld the reduction of the penalty for delay in filing the return of income for the assessment year 1974-75, emphasizing the reasonable cause for the delay due to non-communication of share income by the firm and the absence of communication from the ITO regarding the extension of time applied for by the assessee.