Law:

Section:

Section 271(1)(a) of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1967-68 - Assessee-firm filed its return of income late by 12 months - Assessee explained that return was delayed because its books could not be closed as they were required to be tallied with books of other various partners - Cause shown by assessee was not accepted by authorities including Tribunal and, therefore, penalty was levied on assessee holding that without reasonable cause assessee failed to furnish return of income - Whether on facts, penalty was rightly levied on assessee under section 271(1)(a) - Held, yes Section 271(2) of the Income-tax Act, 1961 - Penalty - Registered firm - Assessment year 1967-68 - Whether in case covered by section 271(2) in order to calculate penalty, tax payable by assessee on income assessed has to be determined on basis that assessee is an unregistered firm and penalty has to be calculated on tax so determined - Held, yes FACTS For the relevant assessment year, the assessee which was a registered firm, filed its return of income with a delay of twelve months. At the time of the completion of the assessment the ITO initiated penalty proceedings for default under section 271(1)(a). In response to the show-cause notice the assessee stated that the delay in filing the return was caused because the books of the assessee could not be finally closed as they were required to be tallied with the books of other partners. The ITO did not accept said explanation on the ground that if the reason given by the assessee was correct the assessee could have applied for extension of time and further that apart from the oral arguments no evidence was produced to show that the return was delayed for reasons beyond the control of the assessee. The ITO, therefore, held the assessee to be a defaulter under section 271(1)(a) and calculated the penalty by treating it to be an unregistered firm. On appeal, the AAC too rejected the explanation of the assessee. He, however, accepted the assessee's submission which was rejected by the ITO that the payment of self-assessment tax should be considered in computing the penalty. The AAC followed the…

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