Commissioner of Income Tax vs Vadhbag Paper and Board Mills (P.) Ltd.

Following question has been referred for the opinion of this Court by the income tax Appellate Tribunal, Amritsar Bench, Amritsar (''the Tribunal''), arising out of its order dated 30.8.1990 in IT Appeal No. 1210(ASR)/1989, for the assessment year 1984-85:- Whether on the facts and in the circumstances of the case, the income tax Appellate Tribunal has been in error in holding that it was not a fit case for levying the penalty for late filing u/s 271(1)(a) of the income tax Act, 1961 in respect of assessment year 1984-85?

The assessee filed its return for the assessment year 1984-85 on 5.11.1986 showing loss, adjustable against brought forward losses of earlier years. For the earlier years, the assessee had claimed deduction 80-J of the income tax Act, 1961 (''the Act'') which was not allowed and taxable income was determined by adjusting the carry forward losses.

The Assessing Officer initiated penalty proceedings against the assessee for delay in filing the return for the year 1984-85 and rejected the explanation that the assessee had not filed return as in the return for the earlier years, the assessee had claimed loss, if claim u/s 80-J of the Act was allowed. Since the said claim was disallowed, the assessee filed return.

The CIT(A) dismissed the appeal but directed that the penalty be re-computed. Accordingly, penalty of Rs. 29,255/- was computed.

The Tribunal upheld the plea of the assessee that the assessee was not required to file any return of loss and, thus, there was reasonable cause for late filing the return.

We have heard learned counsel for the revenue and perused the findings recorded.

The finding of the Tribunal in paras 9 and 10 of its order that the assessee had reasonable cause for late filing of the return and case for levy of penalty was not made out, cannot be held to be perverse, for the reason that when, the assessee was to file the return, he could not visualize that deduction claimed u/s 80J of the Act for the previous years will be disallowed. Once it is so, the conclusion of the Tribunal cannot be held to be erroneous.

In view of the above, the question referred is answered against the revenue and in favour of the assessee. Reference is disposed of accordingly.