1988 (10) TMI 8 - HC - Income Tax

Court overturns penalty for late income tax return filing, emphasizes provision applies to all; directs reconsideration.

The court ruled in favor of the petitioner, a firm penalized for late filing of income tax return, under section 271(1)(a) of the Income-tax Act. The ... Delay In Filing Return, Penalty Issues:Late filing of income tax return and imposition of penalty under section 271(1)(a) of the Income-tax Act, 1961. Interpretation of section 271(4A) of the Act for condonation of delay. Application of the provision to old assessees. Judicial review of the Commissioner's order rejecting condonation of penalty.Analysis:The petitioner, a firm engaged in contract works and transport business, filed its income tax return for 1970-71 late and was penalized Rs. 5,225 under section 271(1)(a) of the Income-tax Act. The Commissioner rejected the petitioner's request for condonation of delay under section 271(4A) of the Act. The main contention was that the Commissioner erred in interpreting the law, believing the provision applied only to new assessees, not old ones. The petitioner relied on a previous court decision to support the argument that the provision applies to all assessees, old or new.The respondents argued that section 271(4A) applies only when the return is not filed within the prescribed time and that the delay in this case was unjustified. They contended that the penalty was rightly imposed, considering the reasons for the delay provided by the petitioner. They also argued that the previous court decision cited by the petitioner was not applicable to the Income-tax Act.The judge analyzed the provisions of section 271(4A) of the Act in comparison to the Wealth-tax Act and found that the Commissioner's order suffered from two flaws. Firstly, the Commissioner's approach did not align with the law, and secondly, the order lacked reasoning and did not consider all grounds presented by the petitioner for condonation of penalty. The judge noted that the disclosure made by the petitioner was voluntary, and the reasons for delay, including the partners leaving due to war, were not fully considered by the authorities.Consequently, the judge ruled in favor of the petitioner, quashing the Commissioner's order and directing a reconsideration of the application for condonation of penalty under section 271(4A) of the Act. The judge emphasized that the Commissioner had erred in not considering the petitioner's request on its merits and under a misconception of the law. The parties were instructed to bear their own costs.