1986 (7) TMI 177 - AT - Income Tax

Summary

Issues:
Confirmation of penalty under section 271(1)(a) of the Income-tax Act, 1961 for late filing of return.

Analysis:
The case involved contesting the confirmation of a penalty of Rs. 1,85,598 by the Commissioner (Appeals) for late filing of a return by four months for the assessment year 1981-82. The firm, consisting of seven partners, was required to file its return by 31-7-1981 but submitted multiple extension requests citing reasons such as 'books of account under audit' and 'books of account under compilation'. The Income Tax Officer (ITO) rejected these requests, leading to the filing of the return on 31-12-1981. Notably, no notice under section 142(1) requiring the production of books of account was issued by the ITO.

The penalty order highlighted the repeated extension requests made by the assessee and the ITO's contention that the reasons provided were insufficient. The ITO observed that the firm's primary business was conducted by a public limited concern, which was required to be audited, and questioned why the accounts of the concern were not audited on time. The Commissioner (Appeals) upheld the penalty, stating that the reasons for extension requests were invalid, emphasizing that delay in auditing the company's accounts did not excuse the late filing of the return.

The legal representative of the assessee argued that the delay was due to the non-completion of accounts, which was accepted by auditors, preventing timely filing. Reference was made to the agreement between the assessee and the company, highlighting the responsibilities of the assessee in running the company's business. The representative contended that the delay was justified given the circumstances and cited relevant judicial precedents to support the argument.

The Tribunal found that the assessee had valid reasons for the delay, as evidenced by the extension requests made in a timely manner. It was noted that the firm's responsible attitude was evident in seeking extensions and providing explanations for the delay. Consequently, the Tribunal vacated the penalty, absolving the assessee of the charge of late filing without reasonable cause.

Additionally, interest under section 139(8) was levied for the late filing of the return, which was substantial considering the income involved. The Tribunal acknowledged the acceptance of the assessee's income figures without significant modification, indicating a responsible taxpayer attitude. The Tribunal allowed the appeal, considering the valid reasons for the delay in filing the return.