2002 (11) TMI 66 - HC - Income Tax

Court upholds penalty for late tax return due to property dispute resolved in 1982.

P. Govindaswamy Versus Commissioner of Income-Tax.

The Court upheld the levy of the penalty for late submission of the income tax return, ruling that the property dispute, cited as a reasonable cause for ... 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty for late submission of return of income for the period from March 17, 1982, instead of cancelling it in its entirety?' - Though the Commissioner of Income-tax (Appeals) in the appellate order for 1982-83 held that the property dispute went up to October, 1982, we are of the view that the Tribunal on the basis of the materials arrived at the finding that the property dispute was entirely settled in the month of March, 1982, and the assessee had also received a sum of Rs. 20 lakhs on March 16, 1982, in full and final settlement of all such claims and the property dispute did not go beyond the date. We, therefore, hold that the Tribunal was correct in holding that the penalty was leviable on and from March 17, 1982. Accordingly, we answer the question of law referred to us in the affirmative, against the assessee and in favour of the Revenue. Issues:Levy of penalty for late submission of income tax return.Analysis:The case involved a dispute regarding the levy of a penalty for the late submission of an income tax return for the assessment year 1980-81. The assessee failed to file the return by the due date of July 31, 1980, resulting in an ex parte assessment order under section 144 of the Income-tax Act dated February 28, 1983. Subsequently, the assessee filed the return on March 28, 1983, declaring a loss. The Income-tax Officer initiated penalty proceedings under section 271(1)(a) of the Act, proposing a penalty of Rs. 1,98,560 due to the delay. The Commissioner of Income-tax (Appeals) acknowledged a property dispute in the assessee's family as a reasonable cause for the delay, granting a 12-month extension from the due date for filing the return. However, the Commissioner upheld the penalty from July 31, 1982. The Income-tax Appellate Tribunal affirmed the levy of the penalty, stating that the assessee lacked a reasonable cause for the delay in filing the return beyond March 16, 1982. The Tribunal's decision was challenged in the present tax case reference.In the appeal, the assessee argued that the property dispute was resolved only in October 1982, extending the reasonable cause for the delay in filing the return. The Tribunal, after reviewing the facts, found that the property dispute was settled by a compromise in December 1981, and the assessee received a settlement amount in March 1982. The Tribunal concluded that the assessee had no reasonable cause for the delay beyond March 16, 1982, as the property dispute was fully resolved by then. Despite the Commissioner's view that the dispute continued until October 1982, the Court upheld the Tribunal's decision, emphasizing that the property matter was settled in March 1982, and the assessee received the settlement amount on March 16, 1982. Therefore, the Court affirmed that the penalty was justifiable from March 17, 1982. The question of law was answered in favor of the Revenue, and no costs were awarded in the case.