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Appeal against penalty under section 271(1)(A) of the IT Act, 1961 for assessment year 1971-72. Analysis: The appeal arose from the confirmation of a penalty of Rs. 89,130 by the AAC of IT, B-Range, Madurai. The assessee filed the return of income late, resulting in an assessment under section 144 for an income of Rs. 2,53,130. After appeal, the income was reduced to Rs. 1,42,540, leading to a reduced penalty of Rs. 33,532. The assessee explained the delay by stating that the books were handed over to the auditor promptly after receiving the notice, but the auditor's illness caused the delay. The Tribunal called for a remand report to verify the auditor's statement, which confirmed the delay due to illness. The Tribunal considered whether the auditor's fault could be an excuse for the assessee. The Tribunal found that the auditor's illness was a valid reason for the delay, and the penalty was cancelled based on the circumstances. The assessee's counsel argued that the delay was due to the auditor's illness, and the assessee, not well-versed in IT matters, relied on the auditor's expertise. The Departmental Representative contended that the delay should be attributed to the assessee, as the auditor acted as an agent. The Tribunal noted that while the penalty initially levied was Rs. 89,130, the actual dispute was narrowed down to Rs. 33,532 due to the reduced income. The Tribunal found the auditor's affidavit credible, despite lack of detailed records, as the auditor's illness was confirmed by the ITO. The Tribunal concluded that the auditor's illness justified the delay, and the penalty was cancelled for the assessment year in question. The Tribunal considered past penalties related to the auditor's illness and termination of services by the assessee. The Tribunal distinguished the case from precedents where repeated defaults indicated conscious negligence. The Tribunal emphasized that the auditor's illness and subsequent termination of services supported the assessee's reliance on the auditor. The Tribunal held that the penalty cancellation was justified based on the unique circumstances of the case and the credible explanation provided by the auditor regarding the delay. The Tribunal found that the auditor's delay was a reasonable cause for the assessee's late filing, leading to the cancellation of the penalty for the assessment year. In conclusion, the Tribunal allowed the appeal, cancelling the penalty levied under section 271(1)(A) of the IT Act, 1961 for the assessment year 1971-72. The decision was based on the credible explanation provided by the auditor regarding the delay in filing the return, attributed to the auditor's illness, and the subsequent termination of services by the assessee. The Tribunal found that the unique circumstances warranted the cancellation of the penalty, considering the reasonable cause for the delay presented by the auditor.
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