1984 (5) TMI 91 - AT - Income Tax

Tribunal upholds cancellation of penalty for late tax return due to theft

The Appellate Tribunal upheld the Commissioner's decision to cancel the penalty under section 271(1)(a) for delayed submission of income tax return due to ... - Issues:Penalty under section 271(1)(a) for delayed submission of income tax return due to theft in business premises.Analysis:The appeal and cross objection were filed against the cancellation of the penalty imposed by the Income Tax Officer (ITO) under section 271(1)(a) of the Act for delayed submission of the income tax return. The assessee's return was filed late due to a theft in the business premises, resulting in the loss of books of account and other valuables. The Commissioner (Appeals) cancelled the penalty after considering the reasons provided by the assessee for the delay. The Commissioner observed that while there was a genuine reason for the delay, the assessee failed to explain this to the ITO during the penalty proceedings. The Commissioner emphasized that ignorance of the law is not an excuse, but acknowledged that the delay was due to sufficient reasons. The Commissioner concluded that no penalty should be levied under section 271(1)(a) due to the circumstances presented by the assessee.The Revenue appealed against the Commissioner's decision, arguing that the assessee did not adequately explain the reason for the delayed submission of the return. The Revenue contended that the assessee had a history of late filings and did not comply with notices from the ITO. On the other hand, the assessee's counsel reiterated that the theft incident was supported by evidence, causing significant disruption to the business operations and necessitating time for re-preparation of the books of account. The counsel argued that there was a reasonable cause for the delay in filing the return, supporting the Commissioner's decision to cancel the penalty.Upon hearing both parties and examining the facts, the Appellate Tribunal noted that the theft incident in the business premises was not disputed by the Revenue. The FIR lodged by the assessee further supported the occurrence of the theft. Considering the impact of the theft on the re-preparation of the books of account and the absence of necessary documents, the Tribunal concluded that the delay in filing the return was justified by reasonable cause. Referring to legal principles, the Tribunal upheld the Commissioner's decision to cancel the penalty under section 271(1)(a) based on the circumstances presented.The Tribunal dismissed the cross objection filed by the assessee, noting the absence of any special grounds for consideration. Consequently, both the appeal by the Revenue and the cross objection by the assessee were dismissed, affirming the cancellation of the penalty for delayed submission of the income tax return due to the theft incident in the business premises.