1988 (7) TMI 115 - AT - Income Tax

Summary

Issues:
1. Whether the assessee is liable to penalty under section 271(1)(A) of the Act for late filing of returns.
2. Whether penalty under section 273(a) of the Act is justified for paying less advance tax than the tax payable under the assessment order.

Detailed Analysis:
1. The first issue pertains to the penalty under section 271(1)(A) of the Act for late filing of returns for the assessment years 1979-80 and 1980-81. The assessee, a cooperative society, filed the returns after the due dates citing that the delay was due to the mandatory audit conducted by the State Government. The Income Tax Officer (ITO) imposed penalties in both years. The Commissioner of Income Tax (Appeals) upheld the penalties, stating they should be calculated on the tax finally assessed. However, the Appellate Tribunal noted that the delay was reasonable as it was due to the completion of the audit report by the State Government-appointed auditor. The Tribunal found no contumacious conduct by the assessee and canceled the penalties under section 271(1)(A) of the Act.

2. The second issue concerns the penalty under section 273(a) of the Act for paying less advance tax than the tax assessed for the same assessment years. The ITO imposed penalties as the tax assessed was more than 75% higher than the tax paid. The Commissioner (Appeals) directed the ITO to recalculate the penalties considering the quantum appeal order. The Appellate Tribunal observed that the main addition made by the ITO was deleted after allowing deductions claimed by the assessee under section 80P. The Tribunal noted the bona fide belief of the assessee in paying the tax and held that penalties were not justified in such circumstances. Referring to a previous court decision, the Tribunal concluded that the penalties under section 273(a) were not warranted. Consequently, the penalties levied were canceled, and the appeals of the assessee were allowed.