Penalty for delayed return filing cannot be set aside solely for a delay-calculation error without deciding sufficient cause.

Mere error in calculating the period of delay in filing a return does not, by itself, justify setting aside an entire penalty for late filing. The High Court held that the Tribunal had relied only on the difference between a 23-month and 25-month delay, but had not examined the assessee's alternative plea of sufficient cause. Since the question of sufficient cause was still necessary for a final decision on penalty, the cancellation of the penalty on the computation error alone was not justified.

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Issues: Whether the Tribunal was justified in setting aside the entire penalty imposed for delay in filing the return merely because the Income-tax Officer had wrongly calculated the period of delay, without deciding the assessee's plea of sufficient cause.

Analysis: The only reason relied upon by the Tribunal was the difference between a 23-month and 25-month delay. That error in computation, by itself, was held insufficient to warrant cancellation of the entire penalty. The assessee's alternative plea that there was sufficient cause for the delay had not been examined on merits, and that question remained necessary for a final decision on penalty.

Conclusion: The Tribunal was not justified in setting aside the entire penalty merely on the ground of a mistake in calculating the period of delay without first deciding the issue of sufficient cause.

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