Law:

Section:

Section 271(1)(a) of the Income-tax Act, 1961 - Penalty - For late filing of return - Assessment year 1972-73 - Assessee-firm, reconstituted on 1-3-1972, filed one return on 9-11-1972 for 1-3-1972 to 3-3-1972 and another return on 7-3-1974 for earlier portion of assessment year - ITO framed one assessment from 1-4-1971 to 31-3-1972 and imposed penalty under section 271(1)(a) - Tribunal deleted penalty holding that no penalty could be levied on the ground that no default was committed under section 271(1)(a) - Whether tribunal justified - Held, on facts, no Facts For the assessment year 1972-73, the assessee-firm, having been reconstituted with effect from 1-3-1972, filed two separate returns - first return on 9-11-1972 for the period 1-3-1972 to 3-3-1972 and second on 7-3-1974 for earlier portion of the assessment year. It declared its income for the two periods at Rs. 2,038 and Rs. 61,297 respectively. Since there was only a change in its constitution, the ITO framed the assessment on 25-3-1975 for the entire period from 1-4-1971 to 31-3-1972 on an income of Rs. 1,58,289 which was reduced by the AAC to Rs. 98,481. During the penalty proceedings under section 271(1)( a), the assessee pleaded (i) that on account of serious differences and dissensions amongst the partners, the books of account were given to arbitrator; (ii) that it was not fully aware of its responsibility to file the return; and (iii) that it applied on 31-7-1972 and 30-9-1972 for extension of time to file returns up to the end of September 1972 and of November 1972, respectively. The ITO observed that the default was clear and deliberate and imposed a penalty of Rs. 18,223. The AAC confirmed the penalty holding, inter alia, (i) that it failed to prove its account books were lying with the arbitrator till February 1974 ; and (ii ) that single return should have been filed for the entire period and, as such, its return for the period from 1-3-1972 to 31-3-1972 was invalid. On second appeal, the assessee contended (i) that the return had been filed within the extended period; and (ii) that filing of an invalid return, even though within time, would not give rise to a default within the meaning of…

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