1984 (12) TMI 1 - SC - Income Tax

Accepting belated filing of return and charging of interest for late filing of return of income - ITAT took the view that in cases falling under sub-s. (1), sub-s. (2) and sub-s. (4) of s. 139, the ITO was empowered to grant time for filing a return, and on such time being granted, the assessee would be liable to pay interest. - Revenue contended that, there is no material to warrant the finding that an application had been made by the assessee for extension of time and that upon such application, the ITO extended the time. - HELD THAT - We consider that in the circumstances of this case a presumption could validly be raised that all that was done. No attempt was made by the Revenue to show that the ITO acted arbitrarily and contrary to the procedure envisaged by the statute. The Appellate Tribunal considered the matter carefully and found circumstances on the record in favour of raising the presumption. The High Court approved of the approach adopted by the Appellate Tribunal and did not find it contrary to law. We do not see any reason to differ from the opinion expressed by the High Court. Levy of penalty - Failure to file return within time allowed - reasonable cause for failure - HELD THAT - Since interest under s. 139(1) has been levied by ITO, it must be presumed that ITO has granted extension of time to file return on the grounds made out by the assessee - hence penalty provision of s. 271(1)(a) does not come into play at all.

Summary

Issues:
1. Justification of the Appellate Tribunal's conclusion on charging interest for delay in filing the return of income.
2. Justification of the Appellate Tribunal's cancellation of penalties levied under section 271(1)(a).

Detailed Analysis:

Issue 1:
The case involved an appeal against the High Court of Andhra Pradesh's judgment on questions of law related to the charging of interest and penalties for delayed filing of income tax returns. The respondent-assessee, a partner in a firm, filed voluntary returns for multiple assessment years with delays. The Income Tax Officer (ITO) imposed penalties under section 271(1)(a) due to the delays. The Appellate Tribunal concluded that the ITO had extended the time for filing the returns based on reasons provided by the assessee, as evidenced by the charging of interest. The High Court upheld this conclusion, citing the presumption that official acts were regularly performed. The court analyzed the provisions of section 139 of the Income Tax Act, 1961, which outline the timelines and conditions for filing returns, extensions, and payment of interest. The court emphasized that interest becomes payable only when the ITO extends the filing deadline. The Revenue contended that there was no evidence of the assessee's application for an extension, but the courts upheld the presumption of regular performance of duties by the ITO.

Issue 2:
The second issue pertained to the cancellation of penalties under section 271(1)(a) by the Appellate Tribunal. The provision allows for penalties if the assessee fails to furnish the return within the time allowed. The court reasoned that when the ITO extends the filing deadline, the additional time granted becomes part of the allowed period for filing the return. Therefore, penalties for failure to file within the allowed time do not apply when an extension has been granted by the ITO. The High Court supported this interpretation, leading to the cancellation of penalties by the Appellate Tribunal. The Supreme Court agreed with the High Court's decision on both issues, upholding the cancellation of penalties and dismissing the appeals with costs.

In conclusion, the Supreme Court affirmed the decisions of the lower courts, ruling in favor of the assessee on both issues regarding interest charges for delayed filing of income tax returns and the cancellation of penalties under section 271(1)(a).