Reasonable cause for delayed return filing can defeat penalty where circumstances were beyond the assessee's control.

Penalty under section 271(1)(a) was not leviable where the assessee showed reasonable cause for delay in filing the return. The explanation accepted on the facts was that business decline, heavy losses, creditor pressure, ill health, lack of assistance, and staff departure prevented timely filing, and the delay was treated as arising from circumstances beyond the assessee's control. On that basis, the penalty was held not exigible and was cancelled.

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Issues: Whether penalty under section 271(1)(a) of the Income-tax Act, 1961 was leviable for delay in filing the return where the assessee claimed reasonable cause for the delay.

Analysis: The delay in filing the return was substantial, but penalty could not be imposed if the assessee established reasonable cause. The explanation accepted on behalf of the deceased assessee was that business decline, heavy losses, creditor pressure, ill health, lack of assistance, and the departure of staff had prevented timely filing. On the facts found, the explanation was not disbelieved, and the delay was treated as having occurred because of circumstances beyond the assessee's control.

Conclusion: The penalty was not exigible and was liable to be cancelled.

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