2015 (7) TMI 1234 - AT - Income Tax

Penalty u/s 272A(2)(c) - validity of notice issue u/s 133 (6) - non complying with the requirement of the notice u/s 133 (6) but was not issued by the Assessing Officer or the DCIT(A) or Jt.CIT or CIT(A) - reasonable cause for the failure of the assessee to submit the report - Held that - Since, the notice was issued by the ITO, it has to be seen that whether he is an assessing officer or not as per section 2 (7A) of the I. T. Act. As per this section, an ITO is also an assessing officer if he is vested with the relevant jurisdiction by virtue of directions or orders issued under sub section (1) or sub section (2) of section 120 or any other provisions of this Act. Hence, it has to be seen that whether in the present case, the ITO who issued the impugned notice was assessing officer or not as per these provisions of section 2 (7A) of the Act. Since, there is no finding of CIT (A) in this regard, the matter has to go back to CIT (A) for fresh decision after giving specific finding on this aspect of the matter if we find that the penalty is otherwise justified because if the penalty is not found to be justified for other reasons, this aspect will be of academic interest only and hence, no decision on this aspect will be necessary and therefore, in that situation, we will not restore the matter back to CIT (A). As submitted by the assessee that due to failure of the computer server of the branch of the assessee, the required report could not be submitted in time. In our considered opinion, it should be accepted as reasonable cause for the failure of the assessee to file report in time. As per section 273B, if the assessee can establish that there was reasonable cause for the failure of the assessee to submit the report, penalty u/s 272A (2) should not be imposed. Therefore, we delete the penalty because in our considered opinion, there was reasonable cause for the failure of the assessee to submit the report in time. - Decided in favour of assessee.

Summary

Issues Involved:
Assessment of penalty under section 272A(2)(c) of the Income Tax Act, 1961 based on the validity of notice issued under section 133(6) by an unauthorized officer.

Detailed Analysis:

Issue 1: Validity of Notice under Section 133(6):
The appellant challenged the penalty imposed by the CIT(A)-II, Kanpur under section 272A(2)(c) based on the notice issued under section 133(6) by the Income Tax Officer (Intelligence), Kanpur. The appellant argued that the notice was invalid as it was not issued by the authorized officers specified in the Act. The tribunal examined the provisions of section 133 of the Act, which empower specific officers to issue notices for information. The tribunal noted that the notice in question was issued by an Income Tax Officer and not by the designated officers. However, the tribunal highlighted the definition of an assessing officer under section 2(7A) of the Act, stating that an ITO can be considered an assessing officer if vested with jurisdiction as per the Act. As the CIT(A) did not provide a finding on this aspect, the tribunal directed a fresh decision on this issue.

Issue 2: Justification of Penalty:
Regarding the penalty imposed, the appellant contended that the delay in submitting the required report was due to a computer server failure at the branch. The tribunal considered this as a reasonable cause for the delay, in line with section 273B, which exempts penalties if a reasonable cause is established. Consequently, the tribunal concluded that the penalty was not justified in the present case and decided to delete the penalty. As the penalty was deemed unwarranted based on the factual circumstances and legal provisions, the tribunal did not refer the matter back to the CIT(A) for a decision on the technical aspect discussed earlier.

In conclusion, the tribunal allowed the appeal of the assessee, pronouncing the order in open court on the mentioned date.