Appeal allowed due to partner's illness causing filing delay. Penalty under Income-tax Act, 1961 deleted.

The Tribunal allowed the appeal against the penalty imposed under section 271B of the Income-tax Act, 1961 for the assessment year 1994-95. The Tribunal found that the illness of a partner in the assessee firm constituted a reasonable cause for the delay in filing the audit report along with the return. As the increase in profit did not indicate timely filing of the report, the Tribunal concluded that there was no justification for the penalty. Therefore, the penalty was deleted, and the appeal was allowed.

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Issues:
Levy of penalty under section 271B of the Income-tax Act, 1961 for the assessment year 1994-95.

Analysis:
The appeal was against the order confirming the penalty under section 271B. The assessee, a partnership firm, filed the return along with the audit report on 20-6-1995, citing the illness of a partner as the reason for the delay. The department initiated penalty proceedings stating no reasonable cause for the delay. The Tribunal noted that filing the audit report along with the return is discretionary, enabling the Assessing Officer to complete the assessment. The illness of a partner was not disputed, and the increase in profit does not imply timely filing of the audit report. The Tribunal found reasonable cause due to the partner's illness, thus no justification for the penalty under section 271B. Consequently, the penalty was deleted, and the appeal was allowed.

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