1981 (7) TMI 127 - AT - Income Tax

Summary

Issues: Appeal against the imposition of penalties under section 140A(3) of the IT Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Jaipur involved three separate appeals concerning penalties imposed under section 140A(3) of the IT Act, 1961 for the assessment year 1976-77. Despite being related to different assesses, the appeals shared common contentions and were consolidated for convenience. The appeals stemmed from orders of the AAC of Income-tax, B-Range, Jaipur.

The primary issue in all three appeals was the justification of the penalties imposed by the ld. AAC under section 140A(3) of the IT Act. The facts of the case of Dr. D.D. Hemani were examined to address this issue, with the conclusion in his case being applied to the other two appeals as well. Dr. Hemani had filed a return declaring his income and paid an amount under section 140A. However, the ITO imposed a penalty for non-compliance with section 140A, as the tax payable according to the ITO differed from the amount paid by Dr. Hemani. The assessee argued that he was unaware of the provisions of s. 91 of the IT Act regarding double tax relief and believed the tax paid in Iran would be fully credited. The ITO and AAC upheld the penalty, leading to the appeal before the Appellate Tribunal.

Upon careful consideration, the Appellate Tribunal ruled in favor of the assessee, stating that there was a controversy regarding the interpretation of s. 91 of the IT Act. Referring to a decision by the Amritsar Bench of the Appellate Tribunal, the ITAT Jaipur held that the assessee was entitled to credit for the tax deducted at source in Iran. Given the conflicting interpretations of the law, the Tribunal found that the assessee's belief in claiming full credit was bonafide. Consequently, the orders of the authorities below imposing penalties were canceled for all three appeals.

In conclusion, the Appellate Tribunal allowed all three appeals, emphasizing the genuine belief of the assessee regarding the credit for tax deducted at the source in Iran and the lack of clarity in the interpretation of s. 91 of the IT Act. The decision highlighted the importance of bonafide belief in tax matters and the need for consistent application of legal provisions.