1978 (12) TMI 68 - AT - Income Tax

Summary

Issues:
- Imposition of penalty under section 140A (3) of the Income Tax Act, 1961 for failure to deposit tax within the specified time frame.

Analysis:
The case involved an appeal by the assessee for the assessment year 1975-76 regarding the imposition of a penalty under section 140A (3) of the Income Tax Act, 1961. The assessee had filed the return of income on 27th August 1975, declaring an income of Rs. 41,702, and deposited a partial amount of tax on 14th November 1975 due to financial constraints. The Income Tax Officer (ITO) initiated penalty proceedings as the full tax amount was not deposited within the stipulated timeframe. The assessee contended that the delay was due to unavoidable circumstances and financial constraints, not contumacious behavior. The Tribunal noted that the assessee had made a partial payment of tax and subsequently paid the remaining amount after a delay of 1 1/2 months. The Tribunal found the assessee's explanation reasonable, stating that there were valid reasons for the delay in payment. The Tribunal emphasized that there was no evidence to suggest that the assessee had the full tax amount available on the due date. The Tribunal concluded that the assessee's conduct was not contumacious, and the penalty was unjustified. The Tribunal overturned the order of the penalty imposed by the ITO and upheld by the Appellate Authority, thereby allowing the appeal of the assessee.

In summary, the judgment revolved around the imposition of a penalty under section 140A (3) of the Income Tax Act, 1961, for the assessee's failure to deposit the full tax amount within the specified timeframe. The Tribunal found the assessee's explanation for the delay in payment reasonable, considering financial constraints and circumstances beyond their control. The Tribunal concluded that there were valid reasons for the delay and no evidence of contumacious behavior, leading to the cancellation of the penalty and allowing the appeal of the assessee.