1979 (8) TMI 116 - AT - Income Tax

Summary

Issues:
1. Penalty imposed for delay in filing income tax return for the assessment year 1973-74.
2. Consideration of extension of time applications for filing the return.
3. Justification for the delay in filing the return due to the seizure of records by the Department.
4. Evaluation of the reasons provided by the assessee for the delay.
5. Assessment of whether the delay was intentional to avoid tax payment.

Analysis:
The judgment by the Appellate Tribunal ITAT MADRAS-A involved the appeal by the Department regarding a penalty imposed on an individual money lender for the delay in filing income tax return for the assessment year 1973-74. The income tax return, due on 31st July 1973, was filed on 20th September 1974, leading to penalty proceedings initiated by the Income Tax Officer (ITO) who levied a penalty of Rs. 7,695 for the default. The Assessee filed explanations which were rejected by the ITO, resulting in the penalty imposition.

The Additional Commissioner of Income Tax (Appeals) [AAC] canceled the penalty after finding that the Assessee had applied for an extension of time until 31st March 1974, although the applications were not present in the departmental record. The Department acknowledged the extension request till 31st March 1974, indicating a substantial part of the penalty imposed needed to be canceled due to the valid extension sought by the Assessee.

The Assessee explained the delay in filing the return was due to a search conducted by the Department on 19th May 1972, resulting in the seizure of all records until then. The Assessee claimed that the account books necessary for preparing the return were in the possession of the Department, causing a delay in examining the accounts and preparing the necessary statements. The Tribunal noted that the Assessee's actions, including filing extension applications and the voluntary filing of the return, demonstrated good intentions and bona fides, justifying the delay.

The Department argued that the delay was intentional to avoid tax payment, a claim refuted by the Tribunal. The Tribunal reasoned that the Assessee had no benefit in delaying the return as it would only lead to interest charges, indicating that the delay was not to avoid tax payment. The Tribunal concluded that the Assessee had a reasonable cause for the delay, considering the circumstances of the seizure of records and the time required to examine the accounts in the possession of the Department.

In light of the valid reasons provided by the Assessee and the absence of mala fide intentions, the Tribunal dismissed the departmental appeal, upholding the cancellation of the penalty by the AAC.