2015 (9) TMI 1577 - AT - Income Tax

Penalty u/s 271(1)(b) - assessee has committed default by not attending on the date of hearing fixed vide notice issued by AO u/s 143(2)/142(1) - reasonable cause for default - Held that - As explained by the assessee in its written submissions that Mrs. Anju Gupta, daughter-in-law of the principal officer of the assessee was suffering from severe disease and had to be hospitalized during the relevant time and thereafter, Shri Satya Prakash Gupta, principal officer of the assessee himself became ill due to heart attack and had to be hospitalized and that the whole family was disturbed and, therefore, there was no compliance. As find that the learned CIT(A) has recorded that in the given circumstances, the penalty is levied at ₹ 10,000/- each only for three of the six assessment years involved and the penalties for the remaining three assessment years were deleted. Also find that for the same default, multiple penalties have been levied in this case. Considering the totality of facts and circumstances of the case and the explanation of the assessee and that the penalty was levied for the same default, it is of the view that the ends of justice shall be met if the penalty levied u/s 271(1)(b) of the Act is restricted to only one assessment year and is deleted for the other years. Accordingly, the penalty of ₹ 10,000/- levied for assessment year 2006-07 confirmed rest deleted. - Decided partly in favour of assessee.

Summary

Issues: Penalty proceedings under section 271(1)(b) - Justification of penalty imposition - Compliance failure due to illness in the family.

Analysis:

Issue 1: Penalty Proceedings under Section 271(1)(b)
The case involved three appeals by the assessee against the order of the learned CIT(A)-XXXI, New Delhi for the assessment years 2006-07, 2007-08, and 2008-09. The primary issue was the initiation of penalty proceedings against the assessee under section 274 read with section 271(1)(b) and the imposition of a penalty of Rs. 10,000. The appellant contended that the penalty imposition was illegal and unjustified.

Issue 2: Justification of Penalty Imposition
During the hearing, the appellant did not appear, and their request for an adjournment was rejected, leading to the disposal of the appeals ex parte. The Departmental Representative (DR) argued that the penalty was justified as the assessee failed to attend the hearing fixed by the Assessing Officer under sections 143(2)/142(1). The DR relied on the orders of the Assessing Officer and the CIT(A) to support the penalty imposition.

Issue 3: Compliance Failure due to Illness in the Family
The assessee explained in written submissions that key individuals in the family, including the principal officer and their daughter-in-law, were hospitalized due to severe illnesses, leading to non-compliance with the hearing notice. The CIT(A) acknowledged these circumstances and reduced the penalties for three assessment years while deleting them for the remaining three. The Tribunal considered the explanation provided by the assessee and the multiple penalties imposed for the same default. Consequently, the Tribunal restricted the penalty under section 271(1)(b) to only one assessment year, confirming it for 2006-07 and deleting it for the other years.

In conclusion, the Tribunal dismissed the appeal for one assessment year and allowed the appeals for the other two years, emphasizing the importance of considering the totality of facts and circumstances in penalty imposition cases.