1991 (1) TMI 205 - AT - Income Tax

Summary

Issues:
- Appeals against penalties for late filing of returns under s. 271(1)(a) of the IT Act, 1961 for the asst. yrs. 1976-77, 1979-80, and 1980-81 by a charitable and religious trust.

Analysis:
1. The appeals were consolidated for convenience as the point involved in all appeals was common. The penalties were imposed for late filing of returns by the charitable and religious trust, which consisted of large forest lands dedicated for temple maintenance. The penalties were imposed by the ITO due to the delay in filing the returns, and the assessee did not provide a reasonable cause for the delay.

2. The assessee appealed to the AAC of IT, Jammu Range, Jammu, raising two contentions. Firstly, the assessee argued that there was no provision in s. 271(1)(a) for imposing penalties on charitable and religious trusts for late filing. Secondly, the delay was attributed to the delayed audited balance sheets, which were received late. However, the AAC rejected both contentions, citing a Tribunal decision that reasonable cause must be furnished before the ITO and cannot be raised for the first time before the Tribunal.

3. The representative for the assessee argued before the Tribunal that the penalties should not have been imposed. They contended that the delay was due to the delayed audit process, the trust's charitable nature, and the lack of awareness among those managing the trust's accounts. The Departmental Representative opposed these submissions, emphasizing compliance with filing deadlines and disregarding the charitable nature of the trust.

4. The Tribunal considered the submissions and held that the penalties should not have been levied. It criticized the AAC for not considering the evidence presented regarding the reasonable cause for the delay. The Tribunal acknowledged the time-consuming process of compiling accounts for a charitable trust managing numerous temples and found the delays reasonable, especially considering the lack of personal gain or fraudulent intent. As a result, the Tribunal canceled the penalties and allowed the appeals.

5. In conclusion, the Tribunal overturned the penalties imposed on the charitable and religious trust for late filing of returns, emphasizing the reasonable cause for the delays due to the trust's nature and operational complexities. The judgment highlighted the importance of considering the specific circumstances of charitable entities in penalty assessments and ensuring fairness in tax enforcement.