1983 (8) TMI 131 - AT - Income Tax

Summary

Issues: Penalty under section 271(1)(a) for delay in filing return, Calculation of assessed tax, Applicability of penalty when no tax payable

In this case, the main issue revolves around the penalty imposed under section 271(1)(a) of the Income-tax Act, 1961 for the delay in filing the return. The assessee failed to file the return by the due date, leading to the initiation of penalty proceedings by the Income Tax Officer (ITO). The ITO calculated the delay to be 39 months and levied a penalty of Rs. 1,594, which was later restricted to 50% of the assessed tax amounting to Rs. 1,021. The assessee appealed against this penalty.

Upon hearing the arguments, the assessee contended that there was no conscious default on their part and that the assessed tax was nil, hence no penalty should be levied. The assessed tax amount was disputed by the assessee, claiming it to be only Rs. 5,787, which would further reduce based on an appellate order. The representative argued that since no tax was payable by the assessee as per section 140A of the Act, no penalty should be imposed for the delay in filing the return. Reference was made to a judgment of the Gauhati High Court in a similar case where it was held that if no tax was payable, then no penalty could be levied, citing the wordings of section 271(1) regarding penalty calculation based on assessed tax reduced by deductions at source or advance tax paid. The assessee in this case had actually received a refund, indicating no tax payable, leading to the conclusion that no penalty should be imposed. Consequently, the penalty was deleted, and the appeal was accepted.