Sufficient cause for delayed return filing may defeat penalty when taxable share income depends on unfinalised firm accounts.

An assessee whose only income was share income from a registered firm showed sufficient cause for delayed filing where the firm had not finalised its accounts or determined its profits in time, so the partner could not ascertain the correct taxable income before the return due date. On those facts, the delay was attributable to a genuine inability to quantify income, and penalty for late filing under section 271(1)(a) of the Income-tax Act, 1961 was not sustainable. The Tribunal's cancellation of penalty was upheld.

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Issues: Whether the assessee had sufficient cause for the delayed filing of the return so as to justify cancellation of penalty under section 271(1)(a) of the Income-tax Act, 1961.

Analysis: The assessee's only income was share income from a registered firm. The firm had not finalised its accounts or determined its profits within time, and the partner could not ascertain his correct income before the firm's accounts were worked out. On these facts, the delay in filing the return was attributable to a genuine inability to quantify the taxable income.

Conclusion: The Tribunal was justified in cancelling the penalty, and the answer to the reference is in favour of the assessee.

Final Conclusion: Penalty for late filing was not sustainable on the facts found, and the cancellation of penalty was upheld.

Ratio Decidendi: Where an assessee's income depends on an unfinalised share of profits from a firm, inability to file the return within time may constitute sufficient cause for the delay and defeat penalty under section 271(1)(a) of the Income-tax Act, 1961.

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