Reasonable cause for delayed return filing defeated penalty where the Revenue did not disprove the assessee's explanation.

Penalty for delayed filing of a return was not sustainable where the assessee showed reasonable cause for the default and the Revenue failed to rebut the explanation as false. The assessee's commission agency business in fruits had a belated return filed after seeking extension on the ground that the books were incomplete and the trial balance did not tally. Those difficulties were found plausible in light of the nature and volume of the business, and the adverse orders had rejected the request summarily. The penalty under section 271(1)(a) of the Income-tax Act, 1961 was therefore cancelled and the deletion of penalty was upheld.

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Issues: Whether penalty for delayed filing of the return was sustainable in the absence of sufficient cause and whether the assessee had shown reasonable cause for the default.

Analysis: The assessee carried on substantial commission agency business in fruits, and the return was filed belatedly after an application for extension on the ground that the books were incomplete and the trial balance did not tally. The explanation was not shown to be false, and the adverse orders merely recorded the delay and rejected the extension in a summary manner. On the facts, the nature and volume of the business made the stated difficulty plausible, and the Department did not disprove the explanation.

Conclusion: The penalty under section 271(1)(a) of the Income-tax Act, 1961 was not justified and was cancelled.

Final Conclusion: The appeal succeeded and the penalty imposed for late filing of the return stood deleted.

Ratio Decidendi: Penalty for delayed filing of a return cannot be sustained where the assessee establishes reasonable cause for the default and the Revenue does not rebut that explanation as false.

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