1977 (10) TMI 34 - HC - Income Tax

Partnership Firm Penalty Upheld for Tax Return Delay

The Bombay High Court upheld the penalty imposed on a partnership firm under section 271(1)(a) of the Income-tax Act for failing to file its return within ... Levy Of Penalty, Return Filed Beyond Time Issues:Penalty imposed under section 271(1)(a) - Justification of penalty imposition - Failure to file return within prescribed period - Application for extension of time - Evidence of delay and illness provided by assessee - Burden of proof on department - Lack of evidence supporting extension application - Lack of justification for delay in filing return.Analysis:The judgment by the Bombay High Court, delivered by Kantawala C.J., addresses the issue of the penalty imposed on the assessee under section 271(1)(a) of the Income-tax Act, 1961. The assessee, a partnership firm, failed to file its return within the prescribed period, leading to the initiation of penalty proceedings by the Income-tax Officer. The assessee claimed to have submitted an application for an extension of time due to delays in receiving branch accounts and illness of the chief accountant. However, no evidence was presented to support this claim, and the department found no record of such an application. The Income-tax Officer imposed a penalty of Rs. 10,833, which was upheld in subsequent appeals.In the appeal before the Appellate Assistant Commissioner, the lack of evidence supporting the extension application was noted, and the penalty imposition was upheld. Subsequently, in the appeal before the Tribunal, the same grounds were reiterated by the assessee, but the penalty was confirmed due to the absence of evidence regarding the delay in receiving branch accounts or the illness of the chief accountant. The Tribunal's decision was challenged, leading to the reference of the question to the High Court.The Court emphasized that the burden of proof lies on the department to show the failure of the assessee to file the return within the stipulated time. However, in this case, the Court focused on whether the penalty imposition was justified based on the facts presented. It was established that the return, due on June 30, 1963, was filed on March 30, 1964, without any concrete evidence supporting the claimed reasons for delay. The Court found that the absence of an application for extension of time, along with the lack of evidence regarding delays and illness, justified the penalty imposition under section 271(1)(a).Therefore, the Court answered the referred question in the affirmative, in favor of the revenue, and directed the assessee to bear the costs. The judgment underscores the importance of substantiating claims with evidence and complying with statutory filing requirements to avoid penalty implications under the Income-tax Act.