Reasonable cause for delayed audit report filing barred penalty under section 271B where the report was submitted before assessment.

Penalty for failure to furnish the audit report on time under section 271B was held not leviable where the report had been filed before completion of assessment and the delay was supported by reasonable cause. The assessee's explanation that the delay arose from the illness of his son was accepted as sufficient cause within section 273B, which bars penalty when the default is satisfactorily explained. The penalty was therefore deleted in favour of the assessee.

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Issues: Whether penalty for failure to furnish the audit report within the prescribed time was leviable under section 271B of the Income-tax Act, 1961, when the audit report was filed before completion of assessment and the assessee showed reasonable cause for the delay.

Analysis: The audit report had been submitted before completion of the assessment. The delay was explained by the illness of the assessee's son, which was treated as a reasonable cause. Reliance was placed on the principle that reasonable cause within the meaning of section 273B of the Income-tax Act, 1961 prevents levy of penalty where the default is satisfactorily explained.

Conclusion: The penalty under section 271B was not leviable and was deleted in favour of the assessee.

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