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TMI Blog1983 (4) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... etermining a total income of Rs. 67,928 against the returned income of Rs. 66,748 and in the course of proceedings the ITO issued a penalty notice to the assessee proposing levy of penalty for belated filing of the return. Rejecting the assessee s reply as not acceptable the ITO levied a penalty of Rs. 6,560, which was confirmed by the AAC in appeal. In further appeal, the assessee s ld. representative submitted that the levy of penalty in the circumstances of this case is unwarranted and unjustified. It is contended that there was no wilful or deliberate default on the part of the assessee and the delay was due to sufficient and reasonable cause especially because the partners were busy on promotion tour and accountant responsible for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find out the tax payable with reference to which the penalty is to be levied, is restricted to the actual advance tax paid. It is submitted that the fiction provided in s. 271(2) of treating the assessee as an unregistered firm for the purpose of levy of penalty should not be restricted to the mere determination of the tax payable on the total income, but should be extended also to treating the assessee as having paid advance tax on the estimated income as an unregistered firm. He furnished two calculations before us on the two hypothesis, one where tax is calculated on the assessed income as if it is unregistered firm, but deduction is made for advance tax in respect of the actual amount paid and the other where deduction is made from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s objections. The facts borne on record clearly show that the entire amount of tax due on the returned income had been paid almost to the full extent by the advance payment of tax and the balance of negligible amount was covered by the refund due to the assessee for the earlier year 1976-77. It is therefore, clear that there could possibly be no motive of postponing the payment by delaying the return. The assessee has explained the reason for the default and beyond rejecting it as untenable or unsatisfactory, there is no material brought on record by the department to show how and why the explanation of the assessee did not act as sufficient or reasonable cause for the delay in filing of the return. The question of penalty for def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case, beyond rejecting the assessee s explanation as not tenable and observing that the assessee ought to have filed an application for extension of time the departmental authorities have not established how and why the explanation offered does not constitute reasonable or sufficient cause. In particular the claim of the assessee that the accountant was ill which delayed the submission of the return has not been examined and found to be incorrect. In the circumstances, we hold that the levy of penalty is not justified and accordingly vacated. 5. There is also considerable merit in the assessee s contention based on the decision of the Karnataka High Court in (1978) 114 ITR 223 (Kar), where for the purpose of levy of penalty by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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