1971 (8) TMI 45 - HC - Income Tax

Belated return - asessee claim that it was due to his bonafide mistake - whether Tribunal was right in law in sustaining the order of penalty under section 271(1)(a) of the Income-tax Act, 1961 - Held, no

Summary

Issues:
- Interpretation of penalty under section 271(1)(a) of the Income-tax Act, 1961
- Whether the failure to file the return within the time allowed and in the manner prescribed warrants penalty imposition
- Reasonable cause for not filing the return within the time allowed

Analysis:
The judgment pertains to a reference under section 256(1) of the Income-tax Act, 1961, regarding the imposition of a penalty under section 271(1)(a). The case involved an assessee who was a partner in a firm and failed to file his individual return within the time allowed. The Income-tax Officer initiated penalty proceedings, which led to an appeal before the Appellate Tribunal.

The primary question was whether the conditions for penalty imposition under section 271(1)(a) were met. The Tribunal held that the penalty could be imposed as the assessee failed to furnish the return within the time allowed. The assessee argued that since he filed the return in the prescribed manner, the penalty should not apply. The court rejected this argument, emphasizing the legislative intent of timely and proper filing to enable assessment completion within the specified period.

Regarding the reasonable cause for the delay in filing the return, the assessee believed he could file it after the firm's registration. The Tribunal acknowledged mitigating circumstances for the delay, indicating a reasonable cause. The court highlighted that penalty imposition requires proof of deliberate defiance of law or conscious disregard of obligation. As the assessee's belief was accepted as a mitigating circumstance, the penalty was deemed unwarranted.

The judgment cited legal principles emphasizing that ignorance of the law is not a valid excuse, but also recognized that not everyone is presumed to know the law. It referenced precedents to support the notion that penalty imposition should involve a conscious disregard of obligations. Ultimately, the court ruled in favor of the assessee, finding reasonable cause for the delay and rejecting the penalty imposition.

In conclusion, the court answered the question in the negative, favoring the assessee, and decided not to award costs. The judgment will be forwarded to the Appellate Tribunal for further action.