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1985 (8) TMI 121

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..... d not be submitted in time. For all the assessment years the WTO rejected the explanation offered by the assessee and held that there was no sufficient cause and unavoidable circumstances preventing the assessee from submitting returns in time. For the five assessment years the WTO levied penalties of Rs. 28,469, Rs. 30,888, Rs. 23,963, Rs. 17,634 and Rs. 8,236 respectively under s. 18 (1) (a) of the Act. The WTO quantified the penalties by adopting two rates, namely, the rate in force upto 31st March 1976 and the rate in force from 1st April 1976. 3. Before the AAC, the assessee challenged the penalty orders on various grounds. It was contended that the penalty orders were bad in law and on facts and that the assessee was prevented by sufficient and reasonable cause from submitting the returns of his net wealth in time. It was also contended that in the assessment proceedings relating to the assessment years under consideration the WTO proceeded under s. 17 and that in those proceedings the WTO himself had extended the time for submission of returns upto 15th March, 1977 and that in view of this fact the levy of penalty was wholly without jurisdiction as the returns were submitt .....

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..... bmit. On the basis of these facts it was contended on behalf of the Revenue that adequate and sufficient opportunity of being heard and to substantiate explanation was given to the assessee by the WTO and, therefore, the AAC was wholly in error in concluding that no reasonable opportunity of being heard was given to assessee and, therefor, for this reason the penalties were not in accordance with law. In this connection, it is further submitted that, as a matter of fact, there was no reasonable cause for late submission of the returns and that the assessee could not furnish any materials in support of the explanation offered by him before the WTO. It is also submitted that even, according to the assessee, illness of his grandfather continued upto 1974 but the returns were filed as late as on 16th March 1977. This also, in the opinion of ld. Departmental Representative, indicated that the assessee had no sufficient or reasonable cause for delayed submission of returns. It was also pointed out that during the relevant period the assessee was earning salary income and this also indicated that the ground pressed into service by him in a bid to explain the delay in submission of returns .....

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..... iod up to 31st March1976 and another rate for the period beginning from 1st April 1976. In this connection it was submitted that it is well settled that penalty is leviable according to law as it stood on the date of default. Any subsequent amendment of law would have no effect in so far as quantification of penalty is concerned. In support of this contention, reliance was placed on the decision of the Gauhhati High Court in the case of T. K. Roy Ors. vs. CWT (1978) 115 ITR 746 (Gau). 8. It was next submitted on behalf of the assessee that the assessee had vide his letter dt. 4th March, 1977, applied to the WTO for extension of time for submission of returns of wealth for the period from 1971 to 1974 and that the WTO vide his letter dt. 9th March, 1977, had extended the time for filing of the returns upto 15th March, 1977. It was, thus, contended that since the returns were filed on 16th March, 1977 no penalties were imposable in this case at least for the asst. yr. 1971-72 to 1974-75. 9. In reply, it was submitted by ld. Departmental Representative that the letter of the WTO dt. 9th March 1977, cannot be considered to mean that the time was extended for filing the returns up .....

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..... urther explanation to submit. From this, it cannot, however, be inferred that the authorised representative stated before the WTO that the assessee would not adduced any evidence if the explanation was not acceptable to the WTO in the absence of any proof. We, therefore, uphold the contention raised on behalf of the assessee that a reasonable and meaningful opportunity of being heard was not afforded to the assessee by the WTO and that for this reason, the penalty order cannot be sustained. This view finds full support from the decision of the Madras High Court in V. L. Dutt vs. CIT 1976 CTR (Mad) 210 : (1975) 103 ITR 634 (Mad). This case arose under s. 271 (1) (a) of the IT Act 1961. The explanation offered by the assessee for late submission of return was that there were labour troubles in the workshop of K. C. P. Ltd. as sister concern. The ITO rejected the contentions and levied the penalty. It was held by their Lordships that if the ITO was not satisfied with the existence of labour troubles or with the facts put forward by the assessee, then he could have given an opportunity to the assessee to establish the same by requiring him to produce any evidence. The assessee is not o .....

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..... ps that the order of the ITO was not in accordance with Law and that the Tribunal was therefore, justified in upholding the order setting aside the levy of penalty. That decision was followed by the Gauhati High Court in the case of CIT vs. Golapari Hoonlal Co. (1977) 110 ITR 896 (Gau). In this case, the amount of penalty levied was less than what was fixed by law. It was held that the composition of penalty is invalid on this ground also and that the Tribunal was justified in cancelling the penalty. Respectfully following these two decisions of the Gauhati High Court which are binding on us, we hold that since the penalties levied in this case were not in accordance with law, they are invalid and were rightly cancelled. 13. It now remains to consider whether in this case the WTO had extended the time for submission of returns upto 15th March 1977 as has been contended on behalf of the assessee. The paper book filed by the assessee on 5th Aug., 1985 contains a copy of the letter dt. 4th March 1977, submitted before the WTO by the assessee and also a copy of the letter of the WTO dt. 9th March 1977 sending his reply to the aforesaid letter of the assessee. In his letter dt. 4th .....

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