TaxTMI 
TaxTMI 
1980 (2) TMI 113
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....0 levied under s. 271(1)(a) for the late filling of the return for the filed year 1973-74. The return for this year was due by 15th Aug., 1973, but it was filed on 15th Feb., 1974. The assessee had asked for extension of time vide its application dt. 15th Aug., 1973 upto 31st Oct., 1973, but the ITO allowed time to the assessee upto 15th Sept., 1973. Another application was made in form no.6 for a further extension of time on 1st Oct., 1973. This was received in the office of the ITO on 23rd Oct., 1973. For the late filling of the return, the ITO initiated penalty proceedings. The assessee pleaded before the ITO that there was a reasonable cause for not being able to submit the return in time inasmuch as the accountant of the Shri Sajjan Singh was ailing from a serious disease right from 1st May, 1973 to 5th Jan., 1974 which ultimately resulted in his death on 5th Jan., 1974 and secondly, that the partners of the assessee firm were very much disturbed as the minor son of one of the partners was kidnapped by the dacoits on 19th Nov., 1973 and who was latter murdered. The ITO did not feel satisfied about the cause shown and held that the assessee was liable for penalty for default of....
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....ll the three points submitted by the assessee had relevance and force. Apart from the fact that an application for extension of time was made which remains undisposed of, there were other quite valid reasons for the assessee explaining the default. The illness of the accountant suffering from Tuberculosis had culminated in his death and that was more than that, the most unfortunate incident of kidnapping and death of the grandson of the partner was sufficient enough to create a serious disaster in the normal working of any organisation, particularly where all the partners are came from the same family. The AAC further observed that the assessee had narrated the details of the happening and that after hearing the case, he was satisfied in such circumstances, the diversion of the attention and non-finalisation of accounts was a normal result. The AAC further observed that although the ITO had mentioned that a reply had been filed by the assessee but that he had not made any comment about such a reply, nor had he given any reasons for considering the explanation as satisfactory. The AAC further observed that the other contention made by the assessee that it had paid more money as adva....
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.... taken by the AAC. Relevant extract from the order of the ITO by which he levied the penalty reads as under; "In response to the above notice the 'a' attended/written reply filed. The default under s. 271 (1)(a) has been committed as the return was received in this office on 15th Feb., 1974 and was late by as much as 6 months. The tax on the income determined works out to Rs.36,030. I, therefore, impose a penalty of Rs. 3,380 under s. 271(1)(a) of the IT act, 1961." As would be seen from the above, it is a very clumsy order. There is no reference in this order to the reasons given by the assessee in reply to the show cause notice for the delay in the filing of the return. The ITO has recorded that written reply was filed by the assessee, but he does not make any mention of the comments of the said reply. Again, he gives no reasons whatsoever in the order as to why the reasons submitted by the assessee could not to be said to be acceptable to him. He merely goes on to say that the default should be committed ''as the return was received in this office on 15th Feb., 1974 and was late by as six months. It is difficult to consider that the ITO applied his mind before he levied th....
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....s and other machine parts with head office at Gwallior and a branch in Bhopal. The rate disclosed in the head office trading account worked out to 18.48 per cent while in the branch it calculated to 17.56 per cent. the ITO however, applied a rate of 20 per cent in both the accounts and thereby made an addition of Rs. 17,148 in the head office and of Rs.27,400 in the branch. The reasons given for rejecting the accounts by ITO were that that assessee had maintained a constant margin of profit atleast over a past three years, notwithstanding the increase in the market price of all commodities and that the sale of whole sale nature having been separately recorded in the consignment account, the trading results could be said to be in respect of retail sales only in which the rate of profit of 20 per cent was normal. The other point made by the ITO for rejection the trading version of the assessee was that the assessee had not maintained quantitative details for purchase or sales. Against the addition made by the ITO, the assessee took the matter in appeal before the AAC. It was submitted before him that is was a case with a very history of accepted results. In 1968-69, and 1969-70, cert....
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....nd that the Tribunal had considered that the disclosed profit of 19 per cent did not call for any addition. The AAC further observed that from the details given by the assessee, it was seen that on sales worth Rs. 1,08,000 on account of the trade discount allowed by the assessee, the margin of profit did not exceed 10 per cent. The AAC further observed that it was true that the assessee had maintained the details of opening and closing stocks and that the purchase and sales were also verifiable. He further observed that in view of the nature of business of the assessee, it was a stupendous task to maintain quantitative details of all the individual items and that it was expecting too much if the assessee was penalised for not keeping such details. The AAC thus concluded that in view of the comparison of the past results, the long accepted history of the assessee, the trade discount allowed and in view of the absence of any justifying reason for a different profit rate in this year, no addition could be said to be sustainable. The AAC thus deleted the two additions and the Department is in appeal before us. 7. The ld. Deptl. Representative made the same submission as were conside....