Reasonable cause for delay accepted, but penalty for inaccurate particulars upheld where completed projects were wrongly shown as work in progress.

Delay in filing the first appellate appeal was treated as supported by reasonable cause because the assessee showed that its accountant had died and the appeal papers remained with him; the limitation objection also lost significance since the matter had been examined on merits. Penalty under section 271(1)(c) was upheld because the assessee failed to substantiate its claim that project income had not accrued, while the record showed completion and occupation of flats supported by municipal completion and occupation certificates. The explanation that the projects were still work in progress was not accepted as bona fide, and the return was found to have contained inaccurate particulars of taxable income.

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Issues: (i) Whether the delay in filing the appeal before the first appellate authority was supported by reasonable cause. (ii) Whether penalty for concealment of income and furnishing inaccurate particulars under section 271(1)(c) was leviable on the facts of the case.

Issue (i): Whether the delay in filing the appeal before the first appellate authority was supported by reasonable cause.

Analysis: The assessee produced the death certificate of its accountant and explained that the appeal papers remained with him. The delay was therefore attributable to a sufficient and bona fide cause. The issue was also rendered academic because the first appellate authority had examined the matter on merits as well.

Conclusion: The delay was held to be supported by reasonable cause, and the objection based on limitation did not survive as a decisive ground.

Issue (ii): Whether penalty for concealment of income and furnishing inaccurate particulars under section 271(1)(c) was leviable on the facts of the case.

Analysis: The assessee had claimed that the projects were still in work-in-progress, but the record showed completion and occupation of flats, along with occupation/completion certificates issued by the municipal authorities. The assessee failed to establish that income had not accrued in the year under appeal or that substantial further expenditure remained to complete the projects. The explanation offered was therefore not accepted as bona fide, and the authorities below were justified in treating the return as having contained inaccurate particulars in respect of taxable income.

Conclusion: The penalty under section 271(1)(c) was upheld.

Final Conclusion: The appeal failed in substance, and the penalty order was sustained.

Ratio Decidendi: Where the assessee fails to substantiate its explanation that project income had not accrued despite completion certificates and occupation of the flats, and the return wrongly portrays completed projects as work in progress, penalty for concealment and furnishing inaccurate particulars is maintainable.

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