1991 (5) TMI 110 - AT - Income Tax

Issues Involved:
1. Levy of penalty under section 271(1)(a) for late filing of income tax returns.
2. Reasonable cause for delay in filing returns.
3. Responsibility of the assessee versus reliance on counsel.
4. Validity of evidence provided to support the cause of delay.
5. Consistency of the assessees' behavior in filing returns.
6. Illness of the counsel as a reasonable cause.
7. Rush of work as a reasonable cause.
8. Validity of cross objections filed by the assessees.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(a):
The appeals and cross objections pertain to the levy of penalty under section 271(1)(a) for the assessment years 1978-79, 1979-80, and 1980-81. The returns of income were filed late by both assessees, leading to the initiation of penalty proceedings by the assessing officer.

2. Reasonable Cause for Delay in Filing Returns:
The assessees attributed the delay to their counsel, Shri Chander Prakash Chabra, who was suffering from cancer and ultimately died on 3rd September 1982. The DC(Appeals) accepted this explanation, citing the continuous illness and ultimate death of Shri Chabra as a reasonable cause for the delay.

3. Responsibility of the Assessee versus Reliance on Counsel:
The Tribunal emphasized that the obligation to file returns rests on the assessees, and they cannot shift this responsibility to their counsel. The Tribunal noted that the assessees did not provide sufficient evidence to prove that they had entrusted the requisite papers and information to Shri Chabra in due time.

4. Validity of Evidence Provided to Support the Cause of Delay:
The only evidence presented was a certificate from Smt. Chabra, the wife of the deceased counsel, which was not filed before the assessing officer but was introduced at the DC(Appeals) stage. The Tribunal found this certificate to be of no value as it did not establish how Smt. Chabra was competent to make such assertions. Additionally, the assessees did not file any affidavits to support their claims.

5. Consistency of the Assessees' Behavior in Filing Returns:
The Tribunal observed that the assessees had a pattern of filing returns late, even for subsequent assessment years when Shri Chabra was no longer their counsel. This behavior indicated negligence on the part of the assessees themselves.

6. Illness of the Counsel as a Reasonable Cause:
The Tribunal scrutinized the claim of Shri Chabra's illness and found that the certificate did not specify the nature or duration of the illness. The Tribunal also noted that Shri Chabra was actively working during the relevant periods, as evidenced by his appearances in other assessment proceedings. Therefore, it was not established that his illness was severe enough to prevent him from filing the returns.

7. Rush of Work as a Reasonable Cause:
The Tribunal rejected the argument that the rush of work with Shri Chabra constituted a reasonable cause for the delay. It held that a citizen cannot flout legal obligations by engaging a counsel who is either too busy or continuously ill. The Tribunal emphasized that the consequences of such defaults must be borne by the citizen.

8. Validity of Cross Objections Filed by the Assessees:
The Tribunal found the cross objections filed by the assessees to be non-maintainable. Under section 253(4), cross objections must attack some part of the order under appeal. However, the assessees' objections supported the DC(Appeals) order, making them unnecessary and unauthorized by section 253(4).

Conclusion:
The Tribunal reversed the DC(Appeals) findings, holding that the delay in filing the returns was without reasonable cause. The penalties levied by the assessing officer were restored, and the appeals of the revenue were allowed. The cross objections filed by the assessees were dismissed as non-maintainable.

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