Contract disclosure default upheld, but penalty reduced after first-time lapse and mitigating circumstances were considered.

Failure to furnish the prescribed particulars of a construction contract within the statutory time constituted a default under section 285A(1) because the explanation for the omission was found unsatisfactory. However, the first-time nature of the lapse, the absence of any subsequent similar default, and the possibility of a bona fide belief that no further intimation was required were treated as mitigating factors on penalty. The default was therefore upheld, but the fine under section 285A(2) was reduced, with relief granted only on the question of quantum.

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Issues: Whether the assessee committed a default under section 285A(1) of the Income-tax Act, 1961 by failing to furnish the prescribed particulars of the contract, and if so, whether the fine imposed under section 285A(2) required reduction.

Analysis: The assessee had entered into a construction contract and did not furnish the prescribed particulars within the statutory time. The reasons offered for the omission were found unsatisfactory, and the default was held to be established. At the same time, the first-time nature of the lapse, the absence of any subsequent similar default, and the possibility of a bona fide impression that no further intimation was required were treated as relevant mitigating factors for fixing the quantum of fine.

Conclusion: The default under section 285A(1) was upheld, but the fine was reduced from Rs. 5,000 to Rs. 500, the assessee succeeding only on the question of quantum.

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