2016 (1) TMI 748 - AT - Income Tax

Penalty u/s 274 read with section 271(1)(b) - nonappearance of the assessee on 09.10.2012, for the said date notices were issued u/s 143(2)/142(1) - Held that - The explanation of the assessee before the ld. CIT(A) was that her sister-in-law Mrs. Anju Gupta was suffering from severe disease and had to be hospitalized on 06.10.2012. Thereafter on the date of hearing i.e. 09.10.2012, Sh. Satya Prakash Gupta head of the family and father-in-law of the assessee became ill and had to be hospitalized due to heart attack. In our opinion there was a reasonable cause for non-appearance for the hearing fixed on 09.10.2012, as such the confirmation of penalty levied by the AO u/s 271(1)(b) of the Act was not justified. In the present case, it appears that the AO levied the penalty for 7 assessment years running from 2005-06 to 2011-12 and the ld. CIT(A) deleted the penalty for the 4 assessment years i.e. the assessment years 2008-09 to 2011-12, considering the explanation of the assessee as plausible. However, the same explanation was not considered as proper for the remaining assessment years i.e. assessment years 2005-06 to 2007-08. In my opinion, the stand taken by the ld. CIT(A) was not justified particularly when he was satisfied that there was a proper and plausible explanation for the 4 out of the 7 assessment years for which penalty was levied by the AO u/s 271(1)(b) of the Act. Therefore, considering the totality of the facts delete the penalty levied by the AO and sustained by the ld. CIT(A). - Decided in favour of assessee

Summary

Issues:
Penalty proceedings under section 274 read with section 271(1)(b) - Justification for penalty imposition - Compliance with hearing notices - Reasonable cause for non-appearance - Proper explanation for non-compliance - Deletion of penalties for certain assessment years.

Analysis:
The appeals before the Appellate Tribunal ITAT DELHI involved penalty proceedings against the assessees under section 274 read with section 271(1)(b) for non-compliance with hearing notices. The orders dated 01.09.2014 of ld. CIT(A)-XXXI, New Delhi were challenged. Common issues were heard together and disposed of by a consolidated order for convenience and brevity.

In the first appeal (ITA No. 6368/Del/2014 for the assessment year 2007-08), the assessee contested the initiation of penalty proceedings and imposition of a penalty of &8377; 10,000 under section 271(1)(b) as illegal and unjustified. The AO levied the penalty due to non-appearance of the assessee at the hearing, considering it a violation of Section 271(1)(b). The assessee explained the non-appearance citing family health emergencies. The ld. CIT(A) confirmed penalties for three out of seven assessment years, considering the explanation plausible.

The Appellate Tribunal, after considering submissions, found a reasonable cause for non-appearance on the specified date due to family health emergencies. It noted the inconsistency in the ld. CIT(A)'s decision to confirm penalties for some years while deleting for others. Consequently, the Tribunal deleted the penalties levied by the AO and upheld by the ld. CIT(A) for the assessment year 2007-08.

In another appeal (ITA No. 6371/Del/2014 for the assessment year 2007-08), the Tribunal dismissed the appeal as defective and duplicate. For Sh. Satya Prakash Gupta in ITA Nos. 6372 to 6374/Del/2014 for the assessment years 2005-06 to 2007-08, the Tribunal found strong reasons for non-appearance due to hospitalization. Similar findings applied to Sh. Ghanshyam Gupta's case. Duplicate appeals were deemed infructuous.

The Tribunal concluded that the penalties levied by the AO and confirmed by the ld. CIT(A) were deleted based on the reasoning applied in the case of Smt. Usha Gupta for the assessment year 2007-08. Consequently, some appeals were allowed, while others were dismissed.

In summary, the Tribunal considered the justifiability of penalties imposed for non-compliance with hearing notices, assessed the reasons for non-appearance, and deleted penalties based on reasonable causes such as family health emergencies, ensuring consistency in decision-making across related cases.