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TMI Blog1991 (1) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... t of accounts of theCo.were not finalised till Feb., 1980. They were ultimately approved in the meeting of the Board of Directors held on28th Feb., 1980and signed by the Auditors on3rd March, 1980. Therefore, return of income could not have been filed before3rd March, 1980. (ii) Since less advance tax of Rs. 5,80,125 only had been paid on estimated income of Rs. 8,50,000 while the returned income was Rs. 18,16,994 on which tax payable was Rs. 12,40,098, the assessee had to pay a further self assessment tax of Rs. 6,59,973 before filing the return. Due to shortage of funds the self-assessment tax could be paid in two instalments on22nd Aug., 1980(Rs. 4,00,000) and on3rd Sept., 1980(Rs. 2,59,973). (iii) The return was not filed even on3rd Sept., 1980, after self assessment tax had been paid, but was delayed till3rd Dec., 1980, as assessee wanted to file return of income and return of surtax simultaneously for which it had to arrange for payment of surtax also." The IAC did not find merit in any one of these reasons and for the detailed reasons referred to in his order, he held that the assessee had no reasonable cause for the late submission of the return. Treating the delay as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even though self-assessment tax was paid by 3rd Sept., 1980 still the return could not be filed because the return for surtax was not ready by then and the assessee was advised that both the return for income-tax and surtax should be filed simultaneously and since the return for surtax was not ready till 3rd Dec., 1980, the return could not be filed. It was only then that the assessee was able to file the return of income. In these circumstances, he vehemently argued that the Department should have held that the assessee had reasonable cause for delay in the filing of the return and the delay in filing of the return was not with a view to avoid the payment of tax because the tax was due was already paid either by way of advance tax or tax deducted at source or self-assessment tax. 5. The learned Departmental Representative on the other hand submitted that the non-availability of funds for payment of self-assessment tax could never be related to the filing of the return because filing of the return is independent of payment of self-assessment tax. There is no provision in the statute to delay the filing of the return if the assessee had no funds for the payment of self-assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her application thereafter as a strong ground. According to him even though the application filed on24th Oct., 1979was rejected, the assessee should have still continued filing the applications for extension of time and should not have given it up. When the assessee gave up filing applications for extension of time, it did mean that the assessee had no reasonable excuse for the delay in the filing of the return. Countering this argument of the Department, the learned representative for the assessee Shri Sampath submitted that in a case where the IAC refuses to extend time, no purpose would be served by filing applications after applications except that it would annoy the IAC more and more against the assessee and would lead him to unsympathetic attitude. The assessee should have filed application but non-filing of the application should not have been made a reason for the levy of penalty, particularly when he refused the earlier applications. We are in agreement with this view expressed by the learned Chartered Accountant that non-filing of the applications after the first application was rejected, could not have been made a reason to levy the penalty although there was nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slative intent. We, are therefore, unable to appreciate this reason as a sufficient reason for the delay in the filing of the return. Similarly the filing of the return for surtax purposes could also not be a reason that delayed the filing of the income-tax returns. That is totally unconnected with the filing of the income-tax return. On the contrary, there could be a reasonable cause for delay in the filing of the surtax return unless the income-tax return was ready. What now has been pleaded is the reverse of it. These two reasons, in our opinion, do not serve as reasonable grounds for the delay in the filing of the return. Therefore, we are of the opinion that there was some delay committed by the assessee in the filing of the return which needs to be penalised if there no proper explanation. 9. We have already held that there was a reasonable cause till3rd March, 1980, i.e., till the auditors signed the balance sheet. We can easily expect at least a month or two to finalise the accounts for the purpose of income-tax and compile the return and file it. That may take the delay upto April, 1980 as properly explained. The assessee paid less advance tax and, there was a shortfall o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of the Co. Shri Rajinder Nath was away and out ofDelhion various dates in April, May and June due to which the return could not be filed. (vii) The returns of the other companies of the Group namely M/s Prem Nath Motors Workshop (P) Ltd. And M/s Doon Motors (P) Ltd. Were also filed late in June, 1981." The IAC did not consider these as reasonable and eventually levied a penalty of Rs. 19,712. 13. When the matter came before the CIT(A), he found that the assessee was prevented by sufficient cause from filing of the return and, therefore, cancelled the penalty. The reasons that prevailed with the CIT(A) to cancel the penalty was that till February, 1981, the accounts were not finalised. The assessee was, therefore, in a great dilemma as to how to file the return of income when the accounts were not finalised and also audited. There is one Mr. R.L. Sharma who was looking after the financial affairs as well as the income-tax matters. There were some disputes between the Directors and this particular Sharma had taken sides with one group of Directors inter se and with a view to injure the interest of the other group was deliberately delaying in complying with the law. The Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts were finalised only in the month of February, 1981. It is also an admitted fact that the were some disputes amongst the Directors and that R.L. Sharma was one of those who was involved in the disputes. It was also an undisputed fact that R.L. Sharma was looking after the affairs of the assessee Co. Including tax matters. When the accounts of the company were finalised in February, 1981 till that time, it could not be said that the assessee had no reasonable cause for the delay in the filing of the return. A company having extensive business with its Directors fighting amongst themselves, the finalisation of accounts could always be the casualty and the filing of the return in time could be expected to be the victim. Somehow the accounts were finalised in February, 1981 and that being an admitted position and since no return of income could be filed, unless the accounts were finalised the time taken to finalise the accounts should operate as a reasonable cause for the delay in the filing of the return. The time taken to finalise the accounts if it was due to the disputes amongst the management that would also furnish a reasonable ground for the delay in the filing of the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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