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Issues:
- Appeal against penalty for belated submission of tax return for the assessment year 1972-73. - Interpretation of Section 271(1)(a) of the Income Tax Act. - Consideration of reasonable cause for delay in filing the return. - Evaluation of the relationship between the partners of the firm and its impact on the delay. Analysis: 1. The appeal was filed by a registered firm against the penalty levied by the Income Tax Officer (ITO) for submitting the return for the assessment year 1972-73 belatedly. The ITO initiated penalty proceedings under Section 271(1)(a) of the Income Tax Act due to the late filing of the return on 5th May 1973. The firm explained the delay was due to the death of a relative, causing mental distress and hindering the finalization of accounts. 2. The Assistant Commissioner of Income Tax (AAC) initially allowed the firm's appeal against the penalty. However, the ITO appealed, and the AAC's order was set aside in subsequent proceedings. The AAC questioned the relationship between the deceased individual and the partners of the firm, as well as the impact of the death on the firm's operations. The case was then restored to the AAC for further consideration. 3. During the restored appeal, it was revealed that the partners of the firm were closely related, with family members residing together. The delay in filing the return was attributed to the shock caused by the death of a family member in a tragic accident. The AAC, in the subsequent order, disagreed with the previous decision and upheld the ITO's penalty. 4. The firm raised multiple grounds on appeal, arguing that the delay was justified due to the circumstances surrounding the death and the time required to finalize accounts. The firm's past filing record was presented as evidence of timely compliance. The firm also highlighted the financial implications of the penalty and additional tax liabilities. 5. After considering the arguments presented by both parties, the Appellate Tribunal found merit in the firm's explanation for the delay. The Tribunal acknowledged the impact of the tragic event on the firm's accounting partner and deemed the delay justified by reasonable cause. Consequently, the appeal against the penalty was allowed. 6. The Tribunal emphasized the need to consider the specific circumstances of the case, including the close relationship between the partners and the time required for accounting processes. The Tribunal rejected the AAC's conclusion and accepted the firm's appeal, overturning the penalty imposed by the ITO. In conclusion, the judgment highlights the importance of assessing the reasons behind delays in tax compliance and considering the unique circumstances of each case when imposing penalties under the Income Tax Act.
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