Penalty for delayed return filing requires a clear finding that the delay was without reasonable cause.

Penalty under section 271(1)(a) for late filing of a return was stated to depend on a clear finding that the delay was without reasonable cause. Although the assessee's explanation was not accepted and the return was treated as belated beyond the relevant extension period, the record did not contain any definite conclusion that the delay lacked reasonable cause. In the absence of that essential finding, the legal basis for imposing penalty was not made out and the penalty was liable to be cancelled in favour of the assessee.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was sustainable for delay in filing the return when there was no clear finding that the delay was without reasonable cause.

Analysis: The penalty had been imposed on the footing that the assessee's explanation was not accepted and that the return was filed belatedly without a valid extension covering the relevant period. However, the record did not contain a clear finding that the delay in filing the return was not attributable to reasonable cause. In the absence of such a definite conclusion, the basis for levy of penalty was not established.

Conclusion: The penalty was not justified and was liable to be cancelled, in favour of the assessee.

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