Sufficient Cause for Delayed Self-Assessment Tax Payment Accepted Where Financial Hardship Prevented Timely Remittance

Penalty for late self-assessment tax payment was not justified because the assessees showed sufficient cause for the delay under section 140A(3). The assessees were minors whose income came only from their share in the firm, and the firm's funds were locked in closing stock and outstanding dues. Payment was made as soon as liquidity became available after stock sales and recoveries from buyers. The delay was therefore attributable to financial hardship, not contumacious default, and the explanation was accepted on the basis of the firm's financial position.

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Issues: Whether the assessees had sufficient cause for not paying the self-assessment tax within one month of filing the returns so as to justify cancellation of penalty under section 140A(3) of the Income-tax Act, 1961.

Analysis: The assessees were minors with income only from their share in the firm. The firm's funds were tied up in closing stock and outstanding dues, and the tax was paid as soon as liquidity became available after sale of the stock and realisation from buyers. On these facts, the delay was attributable to financial hardship rather than contumacious default, and the explanation was supported by the firm's financial position.

Conclusion: The assessees were prevented by sufficient cause from making payment within the prescribed time, and the penalty was not justified.

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