1985 (8) TMI 34 - HC - Income Tax

Summary

Issues:
1. Competency of Appellate Assistant Commissioner to levy penalty for the assessment year 1958-59.
2. Jurisdiction of Appellate Assistant Commissioner under the Income-tax Act, 1961.
3. Justification of penalty levy on a disrupted Hindu undivided family.
4. Whether the assessee was prevented by reasonable cause from filing the return within the prescribed time.
5. Deemed waiver of penalty by the Income-tax Officer.

Analysis:

Issue 1:
The central issue revolves around the competency of the Appellate Assistant Commissioner to levy penalty for the late filing of the return. The Appellate Assistant Commissioner initiated penalty proceedings due to a delay of over 13 months in filing the return. The Tribunal upheld the penalty, citing section 297(2)(g) of the Income-tax Act, 1961. The Tribunal rejected the argument of a reasonable cause for the delay in filing the return, as it was raised belatedly without supporting facts. Ultimately, the High Court affirmed the levy of penalty, emphasizing that the Appellate Assistant Commissioner had jurisdiction under section 28 of the Indian Income-tax Act, 1922, to impose a penalty for failure to furnish the return without reasonable cause.

Issue 2:
Regarding the jurisdiction of the Appellate Assistant Commissioner under the Income-tax Act, 1961, the High Court clarified that the relevant provision to consider was section 28 of the Act of 1922, not section 31. The Court highlighted that the Appellate Assistant Commissioner had the authority to levy a penalty if satisfied that the assessee failed to furnish the return without reasonable cause. The Court dismissed the argument that the Appellate Assistant Commissioner lacked the power to levy a penalty, as the authority to do so was explicitly provided under section 28 of the Act of 1922.

Issue 3:
The contention regarding the disrupted Hindu undivided family and the cessation of penalty imposition post-partition was raised. However, the High Court differentiated the present case from precedent by emphasizing the absence of an order recognizing the partition under section 25A. Without such formal recognition, the Hindu undivided family was deemed to continue as joint, allowing for the penalty to be levied on the family as a whole.

Issue 4:
The argument of reasonable cause for the delay in filing the return was dismissed by the Tribunal and subsequently by the High Court. The Court concurred with the Tribunal's decision that such a contention required factual investigation and proof, which was lacking in this case. Therefore, the submission of reasonable cause was not entertained.

Issue 5:
The concept of waiver of penalty by the Income-tax Officer was not substantiated in this case. The High Court noted that for a waiver argument to hold, the Income-tax Officer must have been aware of the late filing and deliberately chosen not to levy a penalty. Since there was no evidence to suggest such awareness or intention, the notion of waiver was deemed inapplicable.