1977 (12) TMI 48 - AT - Income Tax

ITAT Cancels Penalties for Delayed Tax Filing & Payment

The Appellate Tribunal ITAT Gauhati canceled penalties imposed on the assessee under sections 271(1)(a) and 273(b) of the IT Act for delayed filing of ... - Issues:1. Penalties imposed under sections 271(1)(a) and 273(b) of the IT Act, 1961 on the assessee for delayed filing of returns and failure to pay advance tax.Comprehensive Analysis:The judgment by the Appellate Tribunal ITAT Gauhati involved two appeals by the assessee concerning penalties imposed under sections 271(1)(a) and 273(b) of the IT Act, 1961. The penalties were consolidated into a single order for convenience. The assessee, a salaried employee, had earned income from contracts during the relevant assessment year, making him liable to file a return of income voluntarily under section 139(1) of the IT Act by a specified date. However, the return was filed after a significant delay of 15 months, albeit voluntarily after realizing the obligation. The assessee's explanation for the delay was based on a genuine belief that he was not required to file the return voluntarily, which was dispelled later. The Income Tax Officer (ITO) imposed penalties for both defaults, amounting to Rs. 3,007 under section 271(1)(a) and Rs. 1,000 under section 273(b).In the appeal before the Appellate Tribunal, the assessee argued that the delay in filing the return and failure to pay advance tax were unintentional due to a longstanding belief, which was rectified upon advice from a former employer. The assessee contended that there was no conscious disregard of the law and cited the Supreme Court's ruling that penalties need not be levied for minor breaches of the law. The Revenue, however, maintained that the obligations under the law were clear, and the penalties were justified due to the assessee's failure to comply.Upon careful consideration, the Tribunal found that this was the first year the assessee was required to file a return, and his belief regarding voluntary filing appeared genuine, especially considering his prior employment as a salaried individual. The Tribunal noted that the assessee promptly paid the tax upon computation of income, indicating a reasonable cause for the delay in filing the returns. While acknowledging the technical defaults, the Tribunal emphasized that the penalties should not be imposed in the absence of a conscious disregard for the law. As there was no evidence of intentional non-compliance, the Tribunal concluded that the penalties were not sustainable and canceled them, allowing the appeals in favor of the assessee.