Reasonable cause for delayed return filing defeated penalty where no material showed the delay was without justification.

Penalty for late filing of a return was held unsustainable where the assessee gave an explanation that the relevant accounts had not been finalised. The penalty order contained no material showing that the delay was without reasonable cause, and discussion of difficulties relating to an earlier year did not displace the explanation for the year in question. In penalty proceedings, reasonable cause must be negatived on relevant material; absent that, the penalty cannot stand and was cancelled in favour of the assessee.

---

---

Issues: Whether penalty for delay in filing the return under section 271(1)(a) of the Income-tax Act, 1961 was sustainable when the assessee had offered an explanation for the delay.

Analysis: The assessee explained that the return was filed late because the accounts for the relevant period had not been finalised. The penalty order did not contain material showing that the delay was without reasonable cause. The discussion in the appellate order related mainly to difficulties concerning the earlier year and did not establish that the explanation for the year under appeal was unacceptable. In penalty proceedings, the existence of reasonable cause must be negated on the basis of relevant material.

Conclusion: The penalty under section 271(1)(a) was not sustainable and was cancelled in favour of the assessee.

---