R.V. Easwar, Judicial Member - (1.) THESE appeals filed by the assessee relate to the assessment years 1982-83 and 1983-84. They are directed against the consolidated order of the CIT (A) by which he sustained the penalties imposed under Section 271(1)(a) of the Act on the assessee for a period of 10 months. The penalties sustained by the CIT (A) are Rs. 11,962 and Rs. 9,848 respectively.
(2.) The assessee is a registered firm carrying on business in Calcutta. The accounting years ended on 31-1-1982 and 31-1-1983. The returns were due on 30-6-1982 and 30-6-1983. On 20-7-1982. there was a search in the assessee's business premises and the books of account were seized. On 11-7-1984, the ITO issued notices under Section 148 of the Act calling upon the assessee to file returns of income for the two years. In response thereto, the assessee filed the returns for both the years on 25-3-1985. On completion of the assessments, the ITO initiated proceedings for imposing penalties for the delayed submission of the returns. The assessee offered its explanation in writing. It was explained on behalf of the assessee that because of the seizure of the books of account the assessee could not file the returns of income in time. In this connection it was pointed out that in spite of the repeated requests by the assessee, the assessee was not allowed to make inspection of the books and take out copies thereof, which would have facilitated the due submission of the returns. It was also explained that there were frequent changes in the accountants of the assessee-firm which also contributed to the delay. Lastly, it was submitted that the delay was neither intentional nor wilful and should not be penalised. The ITO did not accept the explanation. He pointed out that the assessee did not formally approach the department for inspection of the seized books and for permission to take out copies thereof. The other explanation, namely, change of accountants was not considered reasonable. He, therefore, imposed penalties on the assessee under Section 271 (1)(a) of the Act. He computed the period of default as 32 months for the assessment year 1982-83 and 20 months for the assessment year 1983-84. He levied penalties of Rs. 38,277 and Rs. 19,657.
(3.) THE assessee filed appeals before the CIT (A). THE explanation furnished before the ITO was repeated. THE CIT (A) considered it fair to accept the explanation that the seizure of the books on 20-7-1982 must have caused difficulties in the proper compliance with the Income-tax Act. He, however, noticed that the assessee had taken its own time to formally approach the department for permission to take out copies from the seized accounts and, therefore, it would not be proper to consider the entire period of delay up to March 1985 as having been caused only by the seizure. In this view of the matter he scaled down the period of default to 10 months in each year as being attributable to the assessee. THE penalties were, therefore, reduced to Rs. 11,902 and Rs. 9,848.;