1977 (11) TMI 91 - AT - Income Tax

Summary

Issues: Penalty for delay in filing income tax return and failure to estimate advance tax payable.

In this case, the assessee had delayed filing the income tax return for the assessment year 1970-71, leading to penalty proceedings initiated by the Income Tax Officer (ITO). The ITO levied a penalty under sections 271(1)(a) and 273(a) of the Income Tax Act, 1961. Additionally, the assessee failed to estimate the advance tax payable for the same assessment year and for 1972-73, resulting in further penalties imposed by the ITO. The penalties were upheld by the Appellate Authority, prompting the assessee to file appeals challenging the penalty orders.

During the appeal, the assessee acknowledged the defaults but argued that the penalty orders were invalid as they were passed by a different ITO without affording a fresh opportunity to be heard. The assessee relied on a decision by the Andhra Pradesh High Court to support this contention. On the other hand, the Department's representative cited a decision by the Calcutta High Court, asserting that it was not necessary for the successor ITO to issue a fresh notice before passing penalty orders.

The Appellate Tribunal found in favor of the assessee, emphasizing the importance of natural justice principles and the right to a reasonable opportunity to be heard before imposing penalties. The Tribunal noted that the penalty proceedings were initiated by one ITO but concluded by another ITO without providing the assessee with a chance to present their case. The Tribunal highlighted the requirement under section 129 of the Income Tax Act, 1961, for the successor ITO to intimate the assessee before continuing proceedings left by the predecessor. As the successor ITO failed to provide such notice or opportunity to be heard, the Tribunal held that there was a violation of natural justice principles. Consequently, the Tribunal canceled the penalty orders, allowing the appeals filed by the assessee.