TMI Blog1976 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... also a covering letter. The assessment was then completed on 22nd Aug., 1967. The only assessable income and the only source of income for the assessee for this assessment year was the share income from a firm in which there was only one other partner. The question for consideration is whether there is reasonable cause for the delay in furnishing the return and penalty is imposable. The ITO with whom the AAC agree, imposed a penalty for the full period of default. 3. The firm in which the assessee is partner was constituted on the 5th Sept., 1959. I got dissolved by a dissolution deed on 16th Dec., 1961. Its first assessment was for asst. yr. 1961-62, the accounting year being the year ended 30th Sept., 1960. The return of the firm was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also reopened to include the share income of the firm. On dissolution of the firm on 16th Dec., 1961, the assessee was given by the other partner a promissory note for Rs. 21,000 in full settlement of his claim against the firm and the other partner. That, it appears was paid to the assessee in cash only in the accounting year relevant to asst. yr. 1963-64. So far asst. yr. 1963-64 the assessee filed a return in August, 1965, showing this Rs. 21,000 as a receipt in addition his profit of Rs. 4,000 derived from his own contract business. 4. The assessee had questioned the merit as well as the legality of this individual assessment for asst. yr. 1961-62 as well as the assessment for 1962-63 which were made with a view to include the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y resulted in dissolution on receipt of Rs 21,000 as profit in lieu of interest for the moneys advanced by him irrespective of profit or loss. How far this is a bona fide belief is a matter to be considered. It is true that in assessment proceedings he was not able to establish all this legal invalidity, etc. But that does not preclude him from convincing us in a penalty proceedings like this that it was at least a bona fide belief in his part. 8. In the dissolution deed it is stated in paragraph 5 that the assessee has withdrawn himself from the firm on receipt of a consideration of Rs. 21,000 irrespective of profit or loss which can only be worked out when the works are completed and bills for payment are finalised. That indicates the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of any intention to conceal the share income. It can only be on account of some other reason. The other reason is bona fide belief. So the other reason for omission can only be this bona fide belief. Hence we are satisfied that the assessee was under a bona fide belief that for this asst. yr. 1961-62 he had no share income from the firm. That is why the return was not furnished. So there is reasonable cause for the failure. 10. The ITO had brought out in the penalty order that when notice was issued under s. 148 for this assessment year, the plea of the assessee was different and these pleadings are only an after-thought. Of course the plea put forward along with the revised return was that the contract work in which the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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