Advance tax retains its character before regular assessment, but financial inability alone does not excuse late return filing.

Financial stringency and the inability to attach challans did not by themselves establish sufficient cause for delayed filing, because the return-filing requirement under section 139(9) concerns proof of tax payment and cannot be read to postpone filing until taxes are actually paid. However, amounts recovered or paid after the close of the financial year but before regular assessment retained their character as advance tax under Chapter XVII-C and had to be credited under section 219. For penalty computation under section 271(1)(a), those sums were therefore deductible from assessed tax, and the penalty base had to be recomputed on that footing.

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Issues: (i) Whether the assessee was prevented by sufficient cause from filing the return in time because advance tax and self-assessment tax had not been paid and challans could not be attached with the return; (ii) Whether amounts of advance tax recovered after the close of the financial year but before filing of the return and regular assessment were to be treated as advance tax for reducing assessed tax while computing penalty under section 271(1)(a).

Issue (i): Whether the assessee was prevented by sufficient cause from filing the return in time because advance tax and self-assessment tax had not been paid and challans could not be attached with the return.

Analysis: The requirement under section 139(9) was held to relate to proof of tax actually claimed to have been paid, not to a supposed obligation to withhold filing of the return until the taxes were paid. The provision could not be read so as to nullify section 140A(3). Financial stringency did not prevent the assessee from filing the return within time, especially when the audited accounts were available.

Conclusion: The plea of sufficient cause for late filing was rejected and the assessee did not succeed on this issue.

Issue (ii): Whether amounts of advance tax recovered after the close of the financial year but before filing of the return and regular assessment were to be treated as advance tax for reducing assessed tax while computing penalty under section 271(1)(a).

Analysis: Amounts paid or recovered towards advance tax retain that character under Chapter XVII-C until regular assessment, and section 219 required credit to be given for such sums. The post-year-end payments recovered from the assessee were therefore available for reduction while determining the base for penalty under section 271(1)(a). The Court applied the principle that delayed advance-tax payments do not lose their identity as advance tax before regular assessment.

Conclusion: The additional sum of advance tax was to be deducted while computing the assessed tax base for penalty, and the assessee succeeded on this issue.

Final Conclusion: The penalty computation was directed to be recomputed by granting credit for the additional advance-tax payments, but the explanation based on inability to file the return on time was not accepted.

Ratio Decidendi: For penalty under section 271(1)(a), advance tax paid or recovered after the due dates but before regular assessment continues to be advance tax and must be credited in reducing assessed tax, while financial inability to pay advance tax does not by itself establish sufficient cause for belated filing of the return.

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