1980 (11) TMI 76 - AT - Income Tax

Summary

Issues:
1. Penalty for delay in filing return
2. Reasonable cause for delay
3. Treatment of advance tax payment in penalty computation

Analysis:

Issue 1: Penalty for delay in filing return
The case involved an appeal by M/s. Orissa Agri. Co. Ltd. against a penalty of Rs. 4,516 imposed by the Income Tax Officer (ITO) for filing the return for the assessment year 1974-75 late. The ITO found that the return, due on 31st July, 1974, was filed on 24th Nov., 1975, resulting in a delay of 15 months. The ITO held that the delay was without reasonable cause and levied the penalty under section 271(1)(a) of the Income Tax Act.

Issue 2: Reasonable cause for delay
The assessee argued that the delay was due to various reasons, including the ill health and subsequent death of their accountant, who was handling the audit work. The assessee also mentioned being a pilot project company of the Orissa Government with various audits being conducted. However, both the ITO and the Commissioner of Income Tax (Appeals) found these reasons insufficient to justify the delay. The CIT (A) noted that the returns were not accompanied by audited accounts and that the accountant's illness did not absolve the company of its duty to file returns on time.

Issue 3: Treatment of advance tax payment in penalty computation
The assessee contended that a payment of Rs. 10,000 made towards advance tax should be considered while computing the penalty. The tribunal analyzed the relevant provisions of Chapter XVII-C of the Income Tax Act and concluded that the payment made by the assessee qualified as advance tax under section 207(2). Therefore, the tribunal directed the ITO to recompute the penalty, considering the advance tax payment.

In conclusion, the Appellate Tribunal partially allowed the appeal by the assessee, directing the ITO to reconsider the penalty amount in light of the advance tax payment made by the company.