2002 (11) TMI 322 - AT - Income Tax

Tribunal Upholds Appeal on Penalty Deletion for Late Filing

The appeal was made against the deletion of a penalty under section 271(1)(a) of the Income-tax Act, 1961 by the CIT(A) for late filing of the return. The ... For late filing of retur Issues involved:1. Appeal against deletion of penalty under section 271(1)(a) of the Income-tax Act, 1961 by CIT(A) for late filing of return.2. Whether the return was filed voluntarily or in response to a notice under section 148 of the Act.3. Bona fide belief of the assessee regarding filing the return when incurring a loss.4. Assessment of income and surrender of certain amounts by the assessee.Analysis:1. The appeal was filed against the deletion of a penalty under section 271(1)(a) of the Income-tax Act, 1961 by the CIT(A) for late filing of the return. The Assessing Officer had levied a penalty of Rs. 1,45,259 due to a delay of 61 months in filing the return. The CIT(A) deleted the penalty considering the circumstances that led to the late filing.2. It was contended that the return was not filed voluntarily but in response to a notice under section 148 of the Act. The assessee had agreed to surrender certain creditors, resulting in the filing of the return. The CIT(A) referred to various decisions supporting the assessee's case, emphasizing that the return was not filed voluntarily due to the loss suffered by the assessee.3. The Tribunal observed that the assessee had a bona fide belief that it was not required to file the return under section 139(1) of the Act when incurring a loss. The voluntary surrender of a sum to buy peace further supported the belief that there was no income liable to tax due to the loss suffered. The Tribunal upheld the CIT(A)'s decision, stating that the assessee was prevented by sufficient cause from filing the return voluntarily.4. In another appeal against the deletion of a penalty under section 271(1)(a) of the Income-tax Act, 1961, the Tribunal found similar facts to a previous case and upheld the CIT(A)'s decision based on a previous ruling. The Tribunal dismissed the appeal, citing the similarity in facts and contentions with the earlier case.This judgment highlights the importance of establishing a bona fide belief and sufficient cause for late filing of returns, especially in cases where the assessee incurs losses. The decisions of the Tribunal and High Courts play a crucial role in determining whether penalties are exigible in such situations.