1983 (3) TMI 149 - AT - Income Tax

Summary

Issues:
Late filing of returns and tax payments for assessment years 1976-77 and 1977-78 leading to penalty proceedings.

Analysis:
The appeals were against the AAC's common order in penalty proceedings for assessment years 1976-77 and 1977-78. The assessee firm maintained accounts on a samvat year basis. The returns for both years were filed late, with the first year's return filed 12 months late and the second year's return filed 11 months late. The firm did not pay advance tax on time for either year. The ITO initiated penalty proceedings under section 271(1)(a) of the Act due to late filing without a reasonable cause. The assessee's explanation was that their part-time accountant had left after the accounting year, but the ITO found this explanation false based on independent inquiries. The penalties levied were Rs. 4,344 and Rs. 6,492 for the two years, respectively.

On appeal to the AAC, the representative accepted the ITO's conclusions but explained that the full-time accountant's multiple responsibilities caused delays in completing accounts. The AAC, without requiring further substantiation, canceled the penalties based on the representative's submissions. The ITO's order was challenged, arguing that the AAC's decision lacked factual basis and should be overturned.

The Chartered Accountant representing the assessee argued that there was no intentional default and the delays were due to the accountant's workload. However, they failed to provide evidence supporting their claims. The ITAT found that the late filing and inadequate tax payments were not justified by the size of the business or the number of partners. The AAC's order was deemed erroneous as it did not consider the lack of substantiation by the assessee's representative. Consequently, the ITAT allowed both appeals, reinstating the penalties imposed by the ITO.

In conclusion, the ITAT upheld the penalties for late filing of returns and inadequate tax payments for the assessment years 1976-77 and 1977-78, as the explanations provided were found to be unsubstantiated and not reasonable.