1976 (1) TMI 54 - AT - Income Tax

Issues Involved:
1. Imposition of penalty under Section 271(1)(a) of the Income Tax Act, 1961.
2. Reasonable cause for delay in filing the return.
3. Consideration of evidence and explanation provided by the assessee.
4. Burden of proof in penalty proceedings.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 271(1)(a) of the Income Tax Act, 1961:
The appeal concerns the imposition of a penalty of Rs. 4,508 under Section 271(1)(a) of the Income Tax Act, 1961, for failure to file the return within the stipulated time. The Income Tax Officer (ITO) initiated penalty proceedings due to the assessee's default in filing the return within the time required under Section 139(2).

2. Reasonable cause for delay in filing the return:
The assessee contended that there were reasonable causes for the delay in filing the return. The primary reasons included the illness and subsequent death of the Karta of the Hindu Undivided Family (HUF), Shri Sobhagmal Lodha, on 15th January 1969, and the subsequent time taken by his successor to complete the accounts. The assessee argued that these circumstances created confusion and delayed the filing of the return.

3. Consideration of evidence and explanation provided by the assessee:
The Appellate Assistant Commissioner (AAC) dismissed the appeal, stating that there was no proof of the return being filed in August 1969. However, the Tribunal noted that the AAC did not independently consider the evidence produced by the assessee in the penalty proceedings. The Tribunal found that the original return mentioned the word "Duplicate" and included a typed copy of the profit and loss account dated 25th August 1969. The Tribunal emphasized that the AAC should have considered the explanation and evidence provided by the assessee independently from the assessment proceedings.

4. Burden of proof in penalty proceedings:
The Tribunal highlighted that the burden of proof in penalty proceedings under Section 271(1)(a) lies with the assessee to show reasonable cause for the delay. This burden can be discharged by preponderance of probabilities rather than proof beyond reasonable doubt. The Tribunal referred to the case of R. Sreenivasan & Co. vs. CIT Madras (1974) 97 ITR 431 to support this conclusion.

The Tribunal concluded that the explanation given by the assessee was reasonable and probable under the circumstances. The illness and death of the Karta, the subsequent time taken to complete the accounts, and the absence of any evidence suggesting deliberate defiance of law or conscious disregard of obligation supported the assessee's case. The Tribunal also noted that the AAC did not find the explanation to be false but considered it unreasonable.

Conclusion:
The Tribunal held that there were reasonable causes which prevented the assessee from filing the return in time. The AAC was not correct in sustaining the penalty order passed by the ITO under Section 271(1)(a) of the Income Tax Act, 1961. The appeal was allowed, and the impugned penalty order was cancelled.

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