1981 (3) TMI 134 - AT - Income Tax

Summary

Issues:
Appeal against penalty under section 273(c) of the IT Act, 1961 for assessment year 1973-74.

Detailed Analysis:

1. Background of the Case:
The appeal was filed by Shri Ramprakash Jaggi against the penalty of Rs. 4,285 imposed by the Income Tax Officer (ITO) under section 273(c) of the IT Act, 1961. The penalty was confirmed by the Appellate Assistant Commissioner (AAC) for the assessment year 1973-74.

2. Assessee's Position and Explanation:
The assessee, a partner in three firms, was issued a demand for advance tax based on the last completed assessment. However, the actual income returned by the assessee was higher than the estimated income, leading to a discrepancy in the advance tax demand. The ITO noticed this and issued a show cause notice for failing to revise the advance tax demand under section 212(3A) of the Act. The assessee's explanation that the firm's accounts were not closed on time was not accepted by the ITO or the AAC.

3. Arguments and Claims:
The assessee argued that the share income from one of the firms should not have been included in his individual income as it belonged to the family. It was also contended that the firms had extensive operations across multiple locations, making it challenging to anticipate the higher income. The assessee highlighted that the firms themselves filed their returns late and were penalized for the same default.

4. Judgment and Decision:
The Tribunal carefully reviewed the facts and arguments presented. It noted that penalties under section 273(c) were imposed on the firms for late filing, indicating that the assessee was not individually responsible for the defaults. The Tribunal found merit in the assessee's explanation that the firm's books were not closed on time, leading to difficulties in estimating profits. As a result, the Tribunal concluded that the assessee's appeal should be allowed, and the penalty of Rs. 4,285 was canceled.

5. Conclusion:
The Tribunal's decision to cancel the penalty was based on the assessee's genuine explanation regarding the challenges faced due to the firm's delayed accounting practices. The judgment emphasized that individual penalties should not be imposed when the defaults were primarily attributable to the firm's actions.