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Appeal against cancellation of penalty under section 271(1)(a) for failure to file income tax return within prescribed time for assessment year 1977-78. Analysis: The appeal was filed by the department challenging the cancellation of penalty imposed under section 271(1)(a) of the IT Act by the CIT(A) for the assessee's failure to file the income tax return within the specified time for the assessment year 1977-78. The return was due on 31st July 1977 but was actually filed on 13th Feb, 1979. The assessee had requested extensions of time, but the return was still delayed. The ITO imposed a penalty of Rs. 15,948, considering a delay of 13 months. The CIT(A) cancelled the penalty, deeming the reasons for the delay as a reasonable cause. The department appealed this decision. During the appeal hearing, the departmental representative argued that the CIT(A) erred in canceling the penalty, emphasizing that the assessee failed to file the return even within the extended time requested. The department contended that the reasons provided by the assessee were unsatisfactory, especially since the business was previously operated as a proprietary concern. The departmental representative also cited a Full Bench decision of the Punjab and Haryana High Court to support the imposition of the penalty without the need to prove deliberate defiance of the law. After considering the submissions and facts presented, the Tribunal found no merit in the department's objection. It was observed that the ITO did not establish that the reasons given by the assessee did not constitute a reasonable cause for the delay in filing the return. The Tribunal criticized the ITO's approach to the explanation provided by the assessee, noting that the rejection of the explanation lacked objective examination. The Tribunal highlighted that the onus is on the Officer to show that the default was without reasonable cause, not on the assessee to prove a reasonable cause for the delay. Reference was made to a recent decision of the Madras High Court, emphasizing the importance of substantial compliance with statutory provisions before levying a penalty. The Tribunal concluded that the CIT(A)'s decision upholding the explanation of the assessee as a reasonable cause was correct and justified, dismissing the department's appeal.
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