Law:

Section:

Section 271(1)(a ) of the Income-tax, 1961-Penalty-For late filing of return-Assessment year 1966-67-ITO levied penalty for assessee's default in late filing of its return by 43 months-tribunal, while accepting AAC's finding that there was no reasonable cause for 13 months, cancelled impugned penalty, holding that penalty, being restricted to 50 per cent of tax payable, was not leviable for default beyond a period of 25 months-Whether tribunal justified in law-Held, on facts, no Facts For the assessment year 1966-67, the assessee-firm filed its return on 9-2-1970, as against the due date 30-6-1966, involving a delay of 43 months. For this default, the ITO levied a penalty of Rs. 6,974 calculated at the rate of 2 per cent per month on the tax payable for the entire period of 43 months. On appeal, the AAC accepted the assessee's explanation that there was a reasonable cause for the delay - but only up to 31-12-1968 and directed the ITO to recompute the penalty for the period commencing on 1-1-1969 till 9-2-1970 with reference to the total income determined in appeal. On second appeal, although the Tribunal confirmed the AAC's finding, it cancelled the impugned penalty holding, inter alia, that section 271(1)(a) restricted the penalty leviable to 50 per cent of the tax payable and, as such, the assessee could not be penalised for such default beyond a period of 25 months. On reference: Held Section 271(1)(a), as it stood at the relevant time, authorised the ITO to impose a penalty where he was satisfied that the assessee had without reasonable cause failed to furnish the return of total income within the time allowed and in the manner required by section 139. The words "for every month during which the default continued" indicate only the multiplier to be adopted in determining the quantum of penalty. It cannot be inferred from the reference to 50 per cent made in its sub-clause (i ) that the section intends to ignore all delay beyond a period of 25 months. In the instant case, the Appellate Tribunal had accepted the position that out of 43 months, the assessee had defaulted in filing its return, without reasonable cause, for 13 months (from 1-1-1969 to 9-2-1970).…

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