Reasonable cause for delayed return filing sustained where individual income depended on finalisation of firm accounts and returns.

Where an assessee's only income was share income from a firm, waiting to file the individual return until the firm's returns were finalised was treated as reasonable cause for delay. The explanation was found consistent with the record, and the pendency of related matters did not undermine it. On that basis, the late-filing penalties were held unsustainable and were cancelled.

---

---

Issues: Whether the assessee had reasonable cause for the delay in filing the individual returns, and whether the penalties imposed for late filing were sustainable.

Analysis: The assessee's only source of income was share income from a firm, and the returns were filed only after the firm's returns were furnished. In that situation, waiting to ascertain the correct income from the firm was treated as a reasonable cause for the delay. The pendency of the firm's matters and the applications before the CIT did not affect the disposal of the appeals, and no material inconsistency was found in the assessee's explanation.

Conclusion: The delay was held to be supported by reasonable cause, and the penalties were not justified.

Final Conclusion: The appeals succeeded and the penalties for both assessment years were cancelled.

Ratio Decidendi: Where an assessee's only source of income depends on the finalisation of a firm's accounts and returns, delay in filing the individual return may constitute reasonable cause, making penalty for late filing unsustainable.

---