This appeal is directed against imposition of penalty for late filing of return of income of asst. yr. 1976-77. return was due to be filed on or before 31st July 1976. It was, however, filed on 27th Sept. 1976. There was thus delay of 13 months in filing return of income. assessee was asked to explain reasons for delay. assessee pointed out to ITO that delay had taken place because of following reasons: (1) That assessee could not get information about his income earned outside India from Trustees in question; (2) that IT Department had initiated proceedings under s. 132 of IT Act, 1961 in assessee s case and case of his other family members and that such proceedings lasted for about 3 year and all books of account etc. were seized in process and because of which assessee could not gather material for preparing his return of income in time, that ultimately assessee was going to have refunded as per his estimate and, therefore, according to him even if there was slight delay, Revenue would not be prejudiced. aforesaid reasons were rejected by ITO by pointing out, inter alia that assessee had not led any evidence to prove that he could not get information about his income and assets located outside India and that search operation had taken place in February, 1975 and that assessee could inspect seized material during period February 1974 to July 1975 and file return within time, that assessee neither inspected material nor applied for extension of time for filing return and that end result of assessment proceedings in assessee s case was not refund as stated by assessee but demand of Rs. 1,26,570. He, therefore, imposed impugned penalty of Rs. 32,908 on assessee. On appeal ld. CIT (A) confirmed said penalty and hence present appeal. We have heard both sides in detail and after taking into account submissions made by them, we are of opinion that on facts of present case imposition of penalty was not justified. Department has not contested that search operations took place in case of assessee and that such operations lasted over considerable period of time and that books of accounts and other relevant material of assessee were seized during said proceedings. effect of search proceedings on equanimity of assessee and his ability to prepare return cannot be under estimated more particularly when return had to be prepared on basis of seized material. Unless material was released to assessee and assessee had time to sort out his books of account and other relevant material which had been seized, it would not be possible for assessee to be in position to prepare accounts property and to file return of income in time. delay of 13 months in circumstances state above does not appear to be without reason. fact that assessee did not have relevant material with him on basis of which he could have prepared basis of which he could have prepared return and that such seized material was in custody of Department constituted, in our opinion, reasonable cause which prevented assesses from filing return of income in time. We accept assessee s explanation on account. assessee had relied on decision of Hon ble Rajasthan High Court in case of CIT vs. Rawat Singh & Sons 1977 CTR (Raj) 248: (1979) 120 ITR 65 (Raj) wherein their Lordships held that order imposing penalty for failure to carry out statutory obligation is result of quasi criminal proceedings and penalty will not ordinarily be imposed unless party obliged, e i t h e r acted deliberately in difference of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of his obligation. Whether penalty should be imposed for failure to perform statutory obligations is matter of discretion of authority to be exercised judicially and on consideration of all relevant circumstances s. 270 and 271 of IT Act, 1961 impose penalty on contumacious or fraudulent assessee and above principle applies to imposition of penalty under these sections. According to their Lordships, in view of decision of Hon ble Supreme Court in case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) it was for Revenue to show that assessee either deliberately acted in defiance of law or that its conduct was contumacious or dishonest. assesee s case on basis of above decision was that ITO had not proved that his conduct was either contumacious or in defiance of law and, therefore, penalty ought not have been imposed on assessee. Strangely enough ld. CIT (A) did not accept above authority relied upon by assessee even though assessee hails from Jaipur which is within jurisdiction of Rajasthan High Court and in whose case, therefore, it was obligatory to follow ratio of aforesaid decision. Instead ld. CIT (A) cited following decisions in which, according to him, contrary stand had been taken and followed them: CIT vs. Gujarat Travancore Agency 1975 CTR (Ker) (FB): (1976) 103 ITR 149 (Ker) (FB) CIT vs. Gangaram chappolia, 1975 CTR (Ori) 25: (1976) 103 ITR 613 (Ori) Addl. CIT vs. Darga Pandarinath Tuljayya & Co. (1977) 107 ITR 850 (AP) Jaggannath Singh vs. CWT (1980) 122 ITR 114 (Pat) Hanutram Ram Prasad, Dibrugah (1978) 112 ITR 187 (Gau) Smt. Kamlavati vs. CIT Central (1978) 111 ITR 248 (Pb) Nemi Chand Ganeshmal vs. CIT (1980) 124 ITR 438 (MP) May be that aforesaid authorities have taken view contrary to that of Hon ble Rajasthan High Court but while deciding case of person hailing from territorial jurisdiction of Rajasthan, ld. CIT (A) had no option in matter but to follow ratio of decision of Hon ble Rajasthan High Court even if there are decisions of other High Court taking contrary stand. This constitutional obligation was lost sight of CIT (A). He did not accept assessee s submission based on above reasoning which was in our opinion, wrong. For reasons given above we are unable to uphold order of ld. CIT (A) accordingly we reverse it and cancel penalty imposed and allow appeal of assessee. *** JAI SINGH OF JAIPUR v. INCOME TAX OFFICER