2013 (10) TMI 77 - HC - Income Tax

Court upholds penalty for failure to file income tax return under amended Section 80(J)(3)

The court upheld the penalty imposed on the petitioner for failing to file a return of income, dismissing the writ petitions. The court found that the ... Penalty for return not filed under the bonafied belief - Assessee main source of income is one-half share from M/s Haryana Steel Fabricator, Faridabad, in which he is a partner - Return in the case of the firm was received on 30.09.1979 and the assessment was made on total income of Rs.91,580/- u/s 143(3) of the Income Tax Act, 1961 vide assessment order dated 21.1.1981. Despite this, the assessee did not file his return and ultimately proceedings u/s 141 were initiated and notice u/s 148 was served upon the assessee on 18.09.1984 – Held that:- Assessee had without reasonable cause failed to furnish his return of income within time – Directed the assessee to pay a sum of Rs.23,260/- (Rs. Twenty three thousand two hundred & sixty only) by way of penalty. Petitioner's plea relating to ignorance of the affect of Section 80J of the Act or the pendency of a matter relating to vires of Section 80J of the Act may have been accepted, if the petitioner had offered an explanation before the Assessing Officer. The petitioner did not appear before the Assessing Officer to offer any explanation and, therefore, cannot be allowed to raise a fresh plea in proceedings under Article 226 of the Constitution of India. The Assessing Officer and the revisional authority have dealt with the petitioner's default and the lack of bonafides – Decided against the Assessee. Issues:1. Interpretation of Section 80(J)(3) of the Income Tax Act, 1961.2. Imposition of penalty for failure to file a return of income.3. Consideration of bonafide belief and ignorance as defenses.4. Validity of orders passed by the Assessing Officer and revisional authority.Interpretation of Section 80(J)(3) of the Income Tax Act, 1961:The petitioner argued that due to Section 80(J)(3) of the Act being introduced with retrospective effect from 01.04.1972, they were not liable to file a return for the assessment year 1979-80. However, the respondent contended that the petitioner could not benefit from this amendment and was rightly directed to pay the penalty. The court found no reason to interfere with the impugned orders, indicating that the retrospective effect of the amendment did not absolve the petitioner from their obligation to file a return.Imposition of penalty for failure to file a return of income:The Assessing Officer imposed a penalty on the petitioner for failing to file a return within the stipulated time frame. Despite being provided with multiple opportunities for a hearing and explanation, the petitioner did not offer any defense before the Assessing Officer. Consequently, the penalty was imposed based on the petitioner's failure to furnish the return of income. The court upheld the penalty, emphasizing the importance of complying with statutory obligations.Consideration of bonafide belief and ignorance as defenses:The petitioner claimed a bonafide belief that they were not required to file a return due to a pending challenge to the vires of Section 80J of the Act. However, the court noted that this defense could have been considered if the petitioner had presented it before the Assessing Officer. Since no explanation was offered during the assessment proceedings, the court held that the petitioner could not raise a fresh plea in subsequent legal proceedings. The lack of bonafides and failure to provide an explanation were key factors in upholding the penalty.Validity of orders passed by the Assessing Officer and revisional authority:Both the Assessing Officer and the revisional authority had examined the petitioner's default and the absence of bonafides. The court found no errors in jurisdiction or law in the orders passed by these authorities, leading to the dismissal of the petitioner's plea. The judgment affirmed the decisions made by the Assessing Officer and the revisional authority, concluding that there were no grounds for interference.In conclusion, the court dismissed the writ petitions, upholding the penalty imposed on the petitioner for failing to file a return of income and rejecting the arguments related to the interpretation of Section 80(J)(3) of the Income Tax Act, bonafide belief, and ignorance as defenses against the penalty.