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Penalty for late filing of income tax return under section 271(1)(a) - Burden of proof on defaulting assessee - Reasonable cause for late filing of return. Analysis: The case involved the imposition of a penalty for the late filing of income tax returns for the assessment year 1966-67 under section 271(1)(a) of the Income-tax Act, 1961. The assessee, a partnership firm, provided an explanation for the delay, citing the ill health and subsequent death of their accountant, which prevented timely filing. The Income Tax Officer (ITO) rejected the explanation as vague and imposed a penalty of Rs. 12,040, treating the firm as unregistered under section 271(2). The assessee appealed to the Appellate Authority Commissioner (AAC), who upheld the penalty, emphasizing the responsibility of partners in filing returns and the lack of a reasonable cause for the delay. The matter was further appealed to the Income-tax Appellate Tribunal, which confirmed the penalty, noting the firm's carelessness in meeting statutory obligations and lack of cooperation during assessment proceedings. The Tribunal highlighted that the burden of proof lies on the defaulting assessee to provide a reasonable explanation for late filing, as per section 271(1)(a) and section 274 of the Act. The Tribunal considered the imposition of penalties as a deterrent for lapses in filing returns and emphasized the initial onus on the assessee to provide a plausible explanation. However, the High Court disagreed with the Tribunal's approach, citing the Full Bench decision in Addl. CIT v. I.M. Patel and Co. The Full Bench decision clarified that in penalty proceedings under section 271(1)(a), the burden of proof lies on the revenue to establish the absence of a reasonable cause for late filing. The Court emphasized that the department must first lead evidence to show prima facie that the assessee had no reasonable cause for the delay. Mere falsity of the explanation provided by the assessee is not sufficient to establish an offense under the section. Applying the principles laid down by the Full Bench, the High Court found that the revenue had failed to discharge its initial burden of proof regarding the absence of a reasonable cause for late filing. The Court noted that the explanation provided by the assessee regarding the ill health of the accountant and the partners' active involvement in the firm's affairs indicated no contumaciousness on their part. Consequently, the High Court ruled in favor of the assessee, holding that the revenue had not established its case for the imposition of the penalty. In conclusion, the High Court answered all three questions in favor of the assessee and against the revenue, directing the Commissioner to pay the costs of the reference to the assessee.
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