Reasonable cause for delayed return filing defeated penalty where business disruption and illness explained the default.

Penalty for delayed filing of returns under section 271(1)(a) was held unjustified where the assessee showed that the delay arose from hostilities, disruption of business, illness of a partner, and resulting business chaos. On the facts recorded, the delay was beyond the assessee's control and was not a deliberate or wilful default. The Revenue failed to establish absence of reasonable cause, so the penalty was cancelled.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable for delayed filing of returns where the assessee attributed the delay to hostilities, disruption of business, illness of a partner, and resultant business chaos.

Analysis: The delay in filing the returns was accepted as having been caused by circumstances affecting the assessee's business, including the impact of hostilities and the partner's illness. On the facts recorded, the delay was beyond the assessee's control and could not be characterised as a deliberate or wilful default. The absence of reasonable cause for the delay was not made out by the Revenue.

Conclusion: Penalty under section 271(1)(a) was not justified and was cancelled.

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