9911796707
TMI Blog1992 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... or these years. The Revenue is on common grounds to urge that the learned CIT(A) has erred in law and on facts in deleting the penalty levied under s. 271(1)(a) on the ground that the income is exempt under s. 10(22) of the IT Act, 1961 which was allowed exemption under s. 11 of the IT Act, 1961. Therefore, it is prayed that the order of the learned CIT(A) may be set aside and that of the ITO restored. 2. It is relevant to state the facts of the case briefly as under: The facts as seen from the record are that the assessee has been assessed as AOP (Trust) for the asst. yrs. 1983-84 and 1984-85 and it followed calendar year as the accounting year. For asst. yr. 1983-84 the assessee filed return on 30th Aug., 1984 showing net deficit of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83-84. The further defence taken by the assessee was that being a trust there was no statutory obligation to submit the return. 5. The ITO held that explanation offered by the assessee was not satisfactory because mere filing of applications for extension of time did not ipso facto entitle the assessee to presume that the extension of time had been granted. He further stated that the assessee is a habitual defaulter for other years also. Holding that there was no reasonable cause for the delay in filing the return of income within the time allowed under s. 139(1) the ITO imposed penalty of Rs. 13,314 under s. 271(1(a) of the IT Act, 1961 calculated at the rate of 1 per cent of the total income without giving effect to the provisions of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the applications were filed requesting extension of time which were not rejected by the ITO. However, the small delay of 2 months beyond this date was considerably for reasonable cause since the accounts of the assessee were not audited till such time. 7. For the asst. yr. 1984-85 following the reasons given by him in penalty proceedings for the asst. yr. 1983-84, he cancelled the penalty. Hence the appeals by the Revenue before the Tribunal. 8. At the time of hearing, the learned Departmental Representative been duly heard and he has supported the penalties levied by the ITO. According to him the CIT(A) was not justified in cancelling the penalty on the ground that the income of the assessee is exempted under s. 10(22) because that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was exempt under s. 11 and 11(1) of the IT Act, 1961 as seen from the assessment order. Therefore, we cannot countenance the plea taken by the counsel in this regard. 11. As regards merits of the case there is force in the contention of the learned counsel for the assessee because the assessee has applied for extension of time four times for the asst. yr. 1983- 84, a fact which was not disputed or denied by the Department. Even for the asst. yr. 1984-85 the assessee sought extension of time four times by filing application for extension of time. The assessee could not file return of income for these years within the extended time sought for, for the reasons that the books of accounts were under audit and only after the audit was complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of total income. Sec. 11(1) declares that subject to the provisions of ss. 60 to 63 the following income shall not be included in the total income of the previous year of the person in receipt of the income. Clause (a) of s. 11(1) is material for our purpose which reads as under : ``Clause (a). Income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in India; and, where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of 25 per cent of the income from such property". From the aforesaid provision it is clear that to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, payable by him, a sum equal to 2 per cent of the assessed tax for every month during which the default continued." At the outset it is to be stated that cl. (a) deals with a situation where the total income of a representative assessee does not exceed the maximum amount which is not chargeable to tax while cl. (b) deals with a case where the total income exceeds the maximum amount which is not chargeable to tax. As detailed above there is no positive total income for the asst. yrs. 1983- 84 or 1984-85 so as to attract either cl. (a) or cl. (b). Clause (a) is based on the total income whereas cl. (b) is based on the tax payleel by the representative assessee. A close appreciation of cl. (a) would show that there should be positive incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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