- (1.) cAggrieved by the order of the Commissioner (Appeals) cancelling the penalty of Rs. 83,500 imposed by the ITO under section 271(1) (a) of the Income-tax Act, 1961 (the Act) the department has come up in appeal.
(2.) These relevant facts need be noticed : The assessee had mostly share income from some partnership firms. Return of income for the assessment year 1975-76 was not filed by her by the due date, i.e., to say 31-7-1975 as was required by section 139(1) of the Act. She filed an application in Form No. 6 on 28-6-1975 for extension of time for furnishing the return up to 30-9-1975. The ITO, it appears, did not pass any order on the said application. He, however, issued a notice under section 139(2) which was served upon the assessee on 29-11-1975. Even then, the assessee did not file any return of income. Subsequent notice under section 142(1) of the Act served upon the assessee also went unresponsed. The ITO, therefore, completed the assessment under section 144 of the Act on total income of Rs. 60,000 on 4-5-1977. Application of the assessee under section 146 of the Act for reopening of the assessment was rejected by the ITO on 30-8-1977. Appeal from the said rejection order of the ITO before the AAC by the assessee also resulted in dismissal on 25-4-1978. The assessee thereafter filed an application under section 264 of the Act before the Commissioner putting for the the grievance that there was sufficient cause for not filing the return of income and not making compliance of the notice under section 142(1). It was also grievance of the assessee before the Commissioner that the assessment under section 144 was arbitrary. The Commissioner allowed the application by order dated 31-3-1979, set aside the assessment and directed the ITO to make a fresh assessment after taking into account all relevant material. Thereafter, the ITO by letter dated 28-4-1980 required the assessee to file, inter alia, the return of income for the assessment year 1975-76. In compliance with that letter of the ITO [IAC (Assessment)] the assessee filed return of income for the assessment year 1975-76 on 30-5-1980. Thereafter, the ITO made fresh assessment.
(3.) According to the fresh assessment, it appears, that the tax assessed was Rs. 1,67,009. The ITO initiated penalty proceedings under section 271(1) (a) and called upon the assessee to explain why penalty should not be imposed for delay of 57 months in filing the return of income. This delay was computed from 31-7-1975 to 30-5-1980. Explanation of the assessee was that of because of long delay in the receipt of account from the partnership firm Metal Converter the return could not be filed in time. The ITO was not satisfied with the explanation. He imposed the penalty of Rs. 83,500.;