Law:

Section:

Section 271(1)(a) of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1966-67 - For relevant assessment year, assessee filed return of income late i.e. on 10-3-1969, after serving a notice under section 148 - ITO, thus, imposed penalty under section 271(1)(a) - On appeal, assessee contended that audit of accounts was completed in year 1967 and, thus, return could not be filed within time allowed by law - Tribunal accepted assessee's contention and cancelled penalty - On instant reference, it was seen that audit was over sometime in 1967 and there was no justification for assessee to wait for atleast two more years to file return - Moreover, return was filed only after issuance of notice under section 148 - Whether aforesaid facts negatived bona fides of assessee to fullest extent - Held, yes - Whether, therefore, it could be said that there was absoluately no material before Tribunal on basis of which it deleted penalty - Held, yes - Whether, consequently, order of Tribunal deleting penalty was to be set aside - Held, yes FACTS For the relevant assessment year the assessee filed return of income late on 10-3-1969, after being served a notice under section 148. A proceeding under section 271(1)(a) was initiated for the default in filing of the return in time. No explanation was furnished to the ITO. On appeal, the assessee took the stand that the accounts were sent for audit and the audit was completed in 1967. Therefore, return could not be filed within the time allowed by law. The first appellate authority rejected the explanation saying that audit was not necessary under the law before return was filed. However, on second appeal, the Tribunal held that the assessee was evidently waiting for the completion of the audit and since audit was completed in 1967, that is, after the due date, the assessee could not submit the return in time. Accordingly, the Tribunal cancelled the penalty levied under section 271(1)(a). On reference : HELD In the instant case, admittedly, audit was over sometime in 1967, and there was no justification for the assessee to wait for at least two more years to file the return. It was quite possible that no…

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