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claimed, which represented expense incurred in
connection with the earning of the income taxed. The
deductions are denied merely because they were not
claimed in a return properly filed until after the
deficiency assessment had been made against taxpayer
upon a return filed for him by the Commissioner in
which no deductions were allowed. We think, however,
that when return was filed by the Commissioner for the
taxpayer, he should have given him the benefit of
proper deductions for expense of doing business, of
which he had been notified by the return which taxpayer
had attempted to file with his agent, or, at least,
that taxpayer should be allowed such deductions when,
upon the assessment of a deficiency against him, he
shows that prior to its assessment he attempted in good
faith to file a return in which such deductions were
claimed. This is nothing but elementary justice, and
we find nothing in the statute which forbids it. The
return made by the Commissioner was clearly not based
upon the best available information.
While there is a specific penalty of 25 per centum
fixed for failure to file tax returns, Section 291,
Revenue Act of 1928, * * * there is no provision that
there shall be an added penalty in the form of not
allowing the delinquent taxpayer deductions to which it
otherwise would be entitled. The Board held in
Anglo-American Direct Tea Trading Co. v. Commissioner,
38 B.T.A. 711: “Inasmuch as separate sections deal
with “manner” and “time,” we think it highly improbable
that Congress ever intended to include the element of
time in the section dealing primarily with the manner
of filing. We hold, therefore, that the mere fact the
return was not filed within the time prescribed by
section 235 does not, under the circumstances here
presented, preclude the allowance of deductions
claimed.” [Ardbern Co. v. Commissioner, 120 F.2d at
426.]
The Board also followed Taylor Sec., Inc. v. Commissioner,
40 B.T.A. 696 (1939), in Blenheim Co. v. Commissioner, 42 B.T.A.
1248 (1940). There, the taxpayer was a foreign corporation that
on June 15, 1935, filed a 1934 personal holding company return
(Form 1120H) reporting income consisting only of dividends
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