1983 (11) TMI 80 - AT - Income Tax

Tribunal emphasizes fair opportunity for assessee, directs reevaluation based on evidence

The Tribunal allowed the appeal, emphasizing the necessity of providing the assessee with a fair opportunity to present its case and the importance of tax ... - Issues:1. Penalty imposed under section 271(1)(a) for delayed filing of return.2. Failure to provide adequate opportunity of hearing and make necessary inquiries before levying penalty.Detailed Analysis:1. The judgment involves a case where the assessee, a registered firm, filed its return for the assessment year 1977-78 after the due date. The Income Tax Officer (ITO) initiated penalty proceedings under section 271(1)(a) due to the delay. The ITO levied a penalty on the assessee for failing to file the return without reasonable cause, despite the assessee's submission that it had filed an extension application in Form No. 6. The penalty was imposed based on the difference between the income initially returned and the income assessed after the order of the ld. AAC.2. In the appeal before the ld. AAC, the assessee argued that one of its partners was ill during the relevant period, leading to difficulties in filing the return on time. The ld. AAC, however, noted that the illness of the partner was not raised before the ITO and found the evidence regarding the filing of Form No. 6 insufficient. Consequently, the ld. AAC confirmed the penalty imposed by the ITO. The assessee, still dissatisfied, appealed to the Appellate Tribunal.3. During the appeal before the Tribunal, the assessee presented additional arguments, emphasizing the partner's illness as the reason for the delay in filing the return. The Tribunal observed that the extension application in Form No. 6 was indeed filed before the due date, indicating a valid attempt by the assessee to seek an extension. The Tribunal criticized the ITO for not adequately considering this evidence and for not conducting thorough inquiries before imposing the penalty. The Tribunal, therefore, set aside the ld. AAC's order and remanded the matter back to him for a fresh decision, instructing him to consider all relevant evidence, including the partner's illness and the extension application.4. Ultimately, the Tribunal allowed the assessee's appeal, highlighting the importance of affording the assessee a fair opportunity to present its case and the necessity for the tax authorities to conduct proper inquiries before penalizing for delayed filing of returns. The Tribunal directed the ld. AAC to reevaluate the case based on all the evidence presented, including the partner's medical condition and the extension application, ensuring a thorough examination of whether there was a reasonable cause for the delay in filing the return.