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Issues involved: Interpretation of penalty provisions u/s 272A of the Income-tax Act, 1961 and the application of relief u/s 273B in case of failure to comply with the law.
Summary: The High Court of Madras considered a case where a partnership firm engaged in film production failed to file returns within the specified time, resulting in a penalty imposed by the Income-tax Officer. The petitioner sought relief u/s 273B of the Act, which provides for penalty imposition exceptions in certain cases. The Commissioner, u/s 264, reduced the penalty by 50% due to health reasons of one of the partners. The petitioner contended that the Commissioner's decision to reduce the penalty by half was contrary to law, arguing that any reasonable cause shown should absolve the assessee from the penalty entirely. The Court analyzed the concept of "reasonable cause" in relation to non-compliance with the law. It emphasized that the cause shown must explain the entire delay, not just a part, to warrant full relief from the penalty. Partial explanations or attempts to mitigate non-compliance do not suffice for complete penalty waiver. The Court highlighted that a construction favoring the assessee in warranted circumstances is preferable over one leading to blanket denial of relief. Reference was made to a previous court decision where a penalty reduction below the prescribed minimum was deemed invalid. Ultimately, the Court dismissed the writ petition, finding no merit in the petitioner's arguments and ruled in favor of upholding the penalty imposed. No costs were awarded in this judgment.
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