Reasonable cause for late return filing requires proof; a section 139(2) notice overrides claimed belief of non-taxability.

A penalty for delayed filing of a return is sustainable where the assessee cannot prove reasonable cause for the default. Unsupported assertions that delay resulted from auditor negligence are insufficient without evidence of when papers were given, why the delay occurred, or any material showing due diligence. A claimed bona fide belief that income was below the taxable limit does not excuse non-filing after a notice under section 139(2) has been issued, because that notice creates a legal obligation to file the return. The stated principle is that statutory default remains unexcused unless reasonable cause is established on the facts.

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Issues: (i) Whether the assessee had reasonable cause for the delay in filing the return so as to avoid penalty under section 271(1)(a) of the Income-tax Act, 1961. (ii) Whether the assessee's plea of bona fide belief that his income was below the taxable limit, in the face of a notice under section 139(2) of the Income-tax Act, 1961, negatived the penalty.

Issue (i): Whether the assessee had reasonable cause for the delay in filing the return so as to avoid penalty under section 271(1)(a) of the Income-tax Act, 1961.

Analysis: The explanation that the delay was due to the auditor's negligence was unsupported by any material. There was no evidence of when the papers were handed over to the auditor, no explanation for the delay on the auditor's part, and the later removal of the auditor did not establish reasonable cause.

Conclusion: The assessee failed to establish reasonable cause for the delay, and the penalty was justified.

Issue (ii): Whether the assessee's plea of bona fide belief that his income was below the taxable limit, in the face of a notice under section 139(2) of the Income-tax Act, 1961, negatived the penalty.

Analysis: The plea was treated as an afterthought because it was not raised in reply to the show-cause notice. Further, once a notice under section 139(2) had been issued before the due date, the assessee was under a legal obligation to file the return. The cited authority was held inapplicable on these facts.

Conclusion: The assessee could not avoid penalty on the basis of bona fide belief, and the statutory default remained unexcused.

Final Conclusion: The penalty for late filing of the return was sustained, and the assessee's appeal failed.

Ratio Decidendi: A penalty for delayed filing of return is maintainable where the assessee fails to prove reasonable cause, and a notice under section 139(2) creates a binding obligation to file the return notwithstanding any claimed belief about non-taxability.

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