1979 (8) TMI 106 - AT - Income Tax

Summary

Issues:
Penalty under section 271(1)(a) of the Income Tax Act for late filing of returns for the assessment years 1966-67 and 1969-70.

Analysis:
The appeals were regarding the imposition of penalties on the assessee for late filing of returns for the assessment years 1966-67 and 1969-70. The Income Tax Officer (ITO) initiated penalty proceedings under section 271(1)(a) of the Income Tax Act due to the delayed filing of returns by the assessee. The assessee argued that there were reasonable causes, such as the filing of a Writ Petition challenging the notices under section 148 of the Act and subsequent settlement discussions with the tax authorities, which prevented timely filing of returns.

The ITO imposed penalties on the assessee, stating that the obligation to file returns within the specified time was not absolved by the Writ Petition or settlement discussions. The assessee appealed the decision, contending that the settlement petition included a prayer for no penalty under the Income Tax Act to be levied. However, the Commissioner did not address the penalties imposed under section 271(1)(a) of the Act in the settlement order.

The Appellate Assistant Commissioner (AAC) upheld the penalties imposed by the ITO, leading the matter to the Tribunal. The Tribunal considered the timeline of events, including the filing of the Writ Petition, subsequent withdrawal, and settlement discussions. It noted that the assessee filed returns after these proceedings and that the settlement petition requested no penalty under the IT Act. The Tribunal found that there were reasonable causes for the delayed filing of returns and no evidence of contumacious or dishonest conduct by the assessee.

Based on the comprehensive analysis of the circumstances, the Tribunal concluded that the penalties imposed were not justified. It emphasized that the assessee was aware of its obligation to file returns, engaged in litigation with legitimate reasons, and eventually settled the matter with the tax authorities. The Tribunal cited the decision in Hindustan Steel Limited vs. State of Orissa to support its reasoning. Consequently, the Tribunal canceled the penalties and allowed both appeals in favor of the assessee.