INCOME TAX OFFICER v. MAJOR GENERAL G. S. WIRK & COL. SOHAN SINGH
[Citation -1986-LL-0409-6]

Citation 1986-LL-0409-6
Appellant Name INCOME TAX OFFICER
Respondent Name MAJOR GENERAL G. S. WIRK & COL. SOHAN SINGH
Court ITAT
Relevant Act Income-tax
Date of Order 09/04/1986
Assessment Year 1972-73
Judgment View Judgment
Keyword Tags imposition of penalty • long-term capital • sale of property • house property • rental income • mens rea
Bot Summary: ITO while framing the assessment initiated penalty proceedings for late filing of the return. ITO during the penalty proceedings the penalty should have not been imposed by the ld. The Revenue s present appeal is against the cancellation of penalty. The ground taken is to the following effect: On the facts and in the circumstances of the case, the AAC is not justified in deleting the penalty of Rs. 4,960 imposed under s. 271(1)(a) of the IT Act, 1961. Assessee filed her return of income for the first time for the asst. Since there is no justification for default the penalty after the receipt of notice was rightly exigible as the default was complete without any explanation. The period of delay should be taken at 13 months i.e. form 1st June, 1979 to 30th June, 1980 since upto May, 1979 the return could be filed without any penalty and in July, 1980 the return was filed also.


S. S. MEHRA, J.M.: assessee is individual by status. Assessment was completed on total income of Rs. 45,320. Return of income was due on or before 31st July, 1972. However, same was filed only on 7th Oct., 1980. ld. ITO while framing assessment initiated penalty proceedings for late filing of return. According to him return was late by 35 complete months. Subsequently show cause notices under s. 214 r/w s. 271(1)(a) of IT Act, 1961 was issued and he assessee filed reply wide letter dt. 23rd Nov., 1982. In said reply assessee, inter alia mentioned that delay could be at most, of 14 months. It was also mentioned that assessee being old lady of 70 years of age was unaware of complexities of tax laws and, therefore, penalty proceedings should be dropped. ld. ITO considering explanation submitted as unsatisfactory imposed penalty of Rs. 4,960 vide order dt. 26th March, 1983 framed under s. 271(1)(a) of Act. Penalty order was subsequently contested by assessee. It appears to have been argued by Shri P. P. Thukrol, ld. advocate on behalf of assessee that assessee was old lady and her husband expired on 27th April, 1983 and that family had agricultural background and thus unaware of tax laws. It was also mentioned that family had never been engaged in any business or other gainful activity and that their main vocation was always farming. It was also submitted that assessee s late husband left some property in Lahore at time of partition of country and in lieu there to family required house property No. 20. Shri Ram Road, Civil Lanes, Delhi on 27th Oct., 1950. said property in Delhi was argued to have been sold on 26th Nov., 1971 in two parts for total consideration of Rs. 1,50,000. It was also submitted that in respect of long-term capital gains arising out of sale no return was filed because of ignorance on part of assessee. ld. advocate also argued that assessee filed her return of income for first time for asst. yr. 1976-77 in respect of rental income arising out of 1/4th share in commercial flat situated at 27-Barakhamba Road, New Delhi. investment in said flat was said to be made out of sale proceeds of her house property No. 20-Sri Ram Road, Civil Lanes, New Delhi. According to ld. advocate relevance of return for assessment year under consideration came to assessee s notice only during he assessment proceedings is for asst. yr. 1976-77 and that, therefore, in view of letter dt. 23rd Nov., 1982 filed before ld. ITO during penalty proceedings penalty should have not been imposed by ld. ITO. ld. AAC cancelled penalty with following observations: I have carefully considered facts of case, submissions made by appellant and also gone through ratio of law decided by superior law Courts, as referred to above by ld. counsel and I am of opinion that appellant was prevented by sufficient and reasonable cause form filing return of income in time. In circumstances of case, I hold that imposition of penalty was unwarranted and same is accordingly cancelled." Revenue s present appeal is against cancellation of penalty. ground taken is to following effect: "On facts and in circumstances of case, AAC is not justified in deleting penalty of Rs. 4,960 imposed under s. 271(1)(a) of IT Act, 1961." On behalf of Revenue ld. Departmental Representative Shri P. K. Sridharan, supported penalty order and further contended that there was no justification for delaying return. According to ld. Departmental Representative it was fit case where penalty should have been confirmed. On behalf of assessee Shri P. P. Thukrol ld. advocate again reported same arguments earlier made before ld. AAC. Mention was also made of copies of two affidavits placed at pp. 4 to 7 of paperbook and so also of letter dt. 23rd Nov., 1982 at pp. 8 to 10 of paperbook. According to Shri Thukrol penalty since was not exigible was correctly knocked off by ld. AAC. Rival submissions have been heard and considered. facts by any large in this case do not appear to be in dispute. Assessee filed her return of income for first time for asst. yr. 1976-77 in respect of rental income form flat at Barakhamba Road, New Delhi. That flat was shown to have been acquired out of sale proceeds of house at Sri Ram Road, Civil Lanes, Delhi. At that time in came to light that assessee should have filed return for asst. yr. 1972-73 in respect of capital gains arising out of sale of property at Civil Lanes, Delhi. ld. ITO in this respect issued notice under s. 148 of Act which notice was duly served on assessee on 28th March, 1979. requirement of notice must have been that return could be filed within 35 days on receipt thereof. It appears as if said notice was altogether ignored by assessee. return in fact was filed only on 10th July, 1980. ld. ITO against this background imposed penalty of Rs. 4,960 taking delay of 35 complete months. ld. AAC for reasons mentioned hereinabove concelled penalty orders. In given circumstances it is possible to appreciate that upto stage of assessment proceedings for asst. yr. 1976-77 assessee could be considered to have no idea about filing of her return of income-tax. But once notice under s. 148 was issued on 28th March, 1979 there could be no reason for not complying with requirement. In fact in assessee s own reply dt. 23rd Nov., 1982 it appears to have been admitted that indeed there was delay of 14 months in filing return. That delay of 14 months must have been calculated taking into consideration date of notice under s. 149. These are uncontroverted facts. As mentioned earlier notice under s. 148 in this case was received on 29th March, 1979. assessee thus could have filed return upto May, 1979 in terms of period provided in notice. It was not done. It is not shown also as to why return was not filed even after receipt of notice. No explanation petition was filed either. Thus, assessee has not been able to bring on record that she was prevented from filing return after notice. No doubt there may be mens rea but there is no explanation either for default. Since there is no justification for default penalty after receipt of notice was rightly exigible as default was complete without any explanation. However, period of delay should be taken at 13 months i.e. form 1st June, 1979 to 30th June, 1980 since upto May, 1979 return could be filed without any penalty and in July, 1980 return was filed also. Thus we confirm any penalty and in July, 1980 return was filed also. Thus we confirm penalty but take delay of 13 months. ld. AAC in our view was not justified to cancel penalty order altogether and at same time ld. ITO was also not justified to impose penalty for 35 months. In result appeal is allowed to above extent. *** INCOME TAX OFFICER v. MAJOR GENERAL G. S. WIRK & COL. SOHAN SINGH
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