Bona fide belief and technical default can defeat penalty for belated return filing under income-tax law.

Penalty for belated filing under section 271(1)(a) is not automatic and depends on judicial discretion after considering all relevant circumstances. Where the default is only technical or venial, or results from a bona fide belief that the assessee was not required to file in the prescribed manner, penalty need not follow. On the facts noted, the assessee treated the sale proceeds of land as capital accretion and not taxable income, so the delay in filing was not viewed as a wilful attempt to suppress income. Penalty was therefore held not exigible.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961, was justified for belated filing of the return.

Analysis: Penalty for breach of a statutory obligation is not automatic and must be imposed in the exercise of judicial discretion on a consideration of all relevant circumstances. Where the default is technical or venial, or where it arises from a bona fide belief that the assessee was not liable to act in the manner prescribed, penalty need not follow. On the facts found, the assessee's income arose from sale of land and the omission to file the return within time was held to stem from a bona fide view that the receipt was accretion to capital and not taxable income. The delay was therefore not treated as a wilful attempt to suppress income.

Conclusion: Penalty under section 271(1)(a) was not exigible and the question was answered in the negative, in favour of the assessee.

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