1990 (9) TMI 138 - AT - Income Tax

Charitable trust liable for penalties on late tax filing; AAC erred in canceling penalties.

The Tribunal held that penalties could be imposed on a charitable trust for late filing of income tax returns for assessment years 1983-84 and 1984-85. It ... Late Filing Issues:Late filing of income tax returns by a charitable trust for assessment years 1983-84 and 1984-85 leading to penalty imposition under section 271(1)(a).Detailed Analysis:1. The appeals filed by the revenue were against the consolidated order of AAC, Range-I, New Delhi for the assessment years 1983-84 and 1984-85. The charitable trust in question filed the returns for both years after the due dates, resulting in penalty proceedings initiated by the assessing officer under section 271(1)(a) and imposition of penalties.2. The AAC cancelled the penalty based on the argument that section 271(3)(d) of the Income-tax Act, 1961, precluded the imposition of penalties in this case, citing a previous decision of the ITAT in a similar matter.3. The revenue contended that section 271(3)(d) was not applicable in this case as no penalty under a specific clause had been imposed. The decision in the case of Aggarwal Dharmarth Hospital Society (Regd.) v. ITO was cited to support this argument.4. The Tribunal analyzed the provisions of the Income-tax Act and highlighted that even if the assessed income of a trust is nil, the obligation to file a return of income is determined with reference to Section 139(4A) if the total income exceeds the maximum amount not chargeable to tax. The Tribunal proceeded on the basis that the income of the trust exceeded the non-taxable amount for both assessment years.5. The Tribunal further explained the provisions of section 271(1)(a) and the special clause (ia) within it, which allows for the imposition of penalties even if the assessed income is nil, as the quantification is based on income without considering certain provisions of the Act.6. The Tribunal delved into the interpretation of section 271(3), emphasizing that the bar on penalty imposition under certain clauses does not apply to trusts. It clarified that the intention behind section 271(3)(d) was to mitigate the rigour of Explanation 3 to section 271 and not to invalidate other provisions of the Act.7. The Tribunal distinguished the case at hand from the precedent cited by the AAC, emphasizing that the penalty imposition in the previous case was found to be nil due to specific reasons, and the provisions of law were not thoroughly examined.8. Ultimately, the Tribunal concluded that the AAC erred in holding that no penalty was imposable under section 271(1)(a) based on section 271(3)(d), and the decision was set aside.9. The Tribunal directed the assessing officer to recalculate the penalty based on the total income of the trust without considering certain provisions of the Act.10. Consequently, the appeals of the revenue were partly allowed, indicating that penalties could be imposed after the reassessment of the penalty amounts based on the recalculated income of the trust.This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the penalty imposition on the charitable trust for late filing of income tax returns.