Appeal allowed, penalty canceled for late tax return filing. Genuine belief in firm's status considered.

The Appellate Tribunal ITAT Hyderabad-A allowed the appeal, canceling the penalty imposed by the ITO under section 271(1)(a) of the Act for late filing of income tax return for the assessment year 1968-69. The Tribunal held that the late filing of the registration application should not invalidate the assessee's genuine belief in the status of a registered firm while filing the return, thereby concluding that no penalty should be imposed.

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Issues:
Levy of penalty under section 271(1)(a) of the Act for late filing of income tax return.

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad-A related to the assessment year 1968-69, with the main issue being the levy of penalty under section 271(1)(a) of the Act. The assessee filed the return of income on 26th May 1969, instead of the due date of 30th June 1968, without providing any explanation for the delay to the Income Tax Officer (ITO). Consequently, a penalty of Rs. 2,119 was imposed by the ITO. The assessee argued that since the return showed the status as a firm and the income returned was below the taxable limit for a registered firm, no penalty should be levied. However, the Appellate Authority Commissioner (AAC) upheld the penalty, citing the late filing of the registration application as a reason for rejecting the assessee's contention.

The assessee contended before the Tribunal that there was a bona fide belief that the assessment would be completed in the status of a registered firm, despite the late filing of the registration application. The Departmental Representative argued that the failure to file the registration application along with the return precluded any genuine belief on the part of the assessee. The Tribunal considered these arguments and observed that the assessee had filed the return as a firm, indicating a possible genuine belief in the status of a registered firm. The Tribunal held that the late filing of the registration application should not invalidate this belief, and consequently, no penalty should be imposed under section 271(1)(a) of the Act for that year.

In conclusion, the Tribunal allowed the appeal, directing the cancellation of the penalty imposed by the ITO. The decision was based on the finding that the late filing of the registration application should not negate the assessee's genuine belief in the status of a registered firm while filing the return.

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